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Education for Growth: Why and for Whom?

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

March 2000

NBER Working Paper No. w7591

This paper tries to reconcile evidence from the microeconometric and empirical macro growth literatures on the effect of schooling on income and GDP growth. Much microeconometric evidence suggest that education is an important causal determinant of income for individuals within countries. At a national level, however, recent studies have found that increases in educational attainment are unrelated to economic growth. This finding appears 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. Another finding of the macro growth literature - that economic growth depends positively on the initial stock of human capital - is shown to result from imposing linearity and constant-coefficient assumptions on the estimates. These restrictions are often rejected by the data, and once either assumption is relaxed the initial level of education has little effect on economic growth for the average country.

Number of Pages in PDF File: 65

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Date posted: August 15, 2000  

Suggested Citation

Krueger, Alan B. and Lindahl, Mikael, Education for Growth: Why and for Whom? (March 2000). NBER Working Paper No. w7591. Available at SSRN: https://ssrn.com/abstract=227643

Contact Information

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

Mikael Lindahl
University of Bonn ( email )
Postfach 2220
Bonn, D-53012
IZA Institute of Labor Economics
P.O. Box 7240
Bonn, D-53072

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