Human Capital in Growth Regressions: How Much Difference Does Data Quality Make?

64 Pages Posted: 23 Jan 2001

See all articles by Angel de la Fuente

Angel de la Fuente

Spanish Council for Scientific Research (CSIC) - Insitute for Economic Analysis; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Rafael Doménech

University of Valencia - Department of Economic Analysis

Date Written: May 2000

Abstract

We construct a revised version of the Barro and Lee (1996) data set for a sample of OECD countries using previously unexploited sources and following a heuristic approach to obtain plausible time profiles for attainment levels by removing sharp breaks in the data that seem to reflect changes in classification criteria. It is then shown that these revised data perform much better than the Barro and Lee (1996) or Nehru et al (1995) series in a number of growth specifications. We interpret these results as an indication that poor data quality may be behind counterintuitive findings in the recent literature on the (lack of) relationship between educational investment and growth. Using our preferred empirical specification, we also show that the contribution of TFP to cross-country productivity differentials is substantial and that its relative importance to differences in factor stocks increases over time.

Keywords: Growth, human capital

JEL Classification: I20, O30, O40

Suggested Citation

de la Fuente, Angel and Doménech, Rafael, Human Capital in Growth Regressions: How Much Difference Does Data Quality Make? (May 2000). Available at SSRN: https://ssrn.com/abstract=231964

Angel De la Fuente (Contact Author)

Spanish Council for Scientific Research (CSIC) - Insitute for Economic Analysis ( email )

UAB Campus
E-08193 Bellaterra
Spain
+34 3 580 6612 (Phone)
+34 3 580 1452 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Rafael Doménech

University of Valencia - Department of Economic Analysis ( email )

Campus de los Naranjos
46022 Valencia
Spain
+96 382 8210 (Phone)
+96 382 8249 (Fax)

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