Education for Growth in Sweden and the World

61 Pages Posted: 31 Jul 1999

See all articles by Alan B. Krueger

Alan B. Krueger

Princeton University - Industrial Relations Section; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Mikael Lindahl

University of Bonn; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: June 1999

Abstract

This paper tries to reconcile evidence on the effect of schooling on income and on GDP growth from the microeconometric and empirical macro growth literatures. Much microeconometric evidence suggests that education is an important causal determinant of income for individuals within countries as diverse as Sweden and the United States. At a national level, however, recent studies have found that increases in educational attainment are unrelated to economic growth. This finding is shown to be a spurious result of the extremely high rate of measurement error in first-differenced cross-country education data. After accounting for measurement error, the effect of changes in educational attainment on income growth in cross-country data is at least as great as microeconometric estimates of the rate of return to years of schooling. We also investigate another finding of the macro growth literature -- that economic growth depends positively on the initial stock of human capital. We find that the effect of the initial level of education on growth is sensitive to the econometric assumptions that are imposed on the data (e.g., constant-coefficient assumption), as well as to the other covariates included in the model. Perhaps most importantly, we find that the initial level of education does not appear to have a significant effect on economic growth among OECD countries. The conclusion comments on policy implications for Sweden based on the human capital literature.

JEL Classification: E10, I21, J24

Suggested Citation

Krueger, Alan B. and Lindahl, Mikael, Education for Growth in Sweden and the World (June 1999). Available at SSRN: https://ssrn.com/abstract=171545 or http://dx.doi.org/10.2139/ssrn.171545

Alan B. Krueger (Contact Author)

Princeton University - Industrial Relations Section ( email )

Princeton, NJ 08544-2098
United States
609-258-4046 (Phone)
609-258-2907 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Mikael Lindahl

University of Bonn ( email )

Postfach 2220
Bonn, D-53012
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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