The Returns to Education: Macroeconomics

44 Pages Posted: 30 Jun 2003

See all articles by Barbara Sianesi

Barbara Sianesi

Institute for Fiscal Studies (IFS); IZA Institute of Labor Economics

John Van Reenen

London School of Economics - Centre for Economic Performance (CEP); Stanford Graduate School of Business; Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR)

Abstract

We offer an extensive summary and a critical discussion of the empirical literature on the impact of human capital on macro-economic performance, with a particular focus on UK policy. We also highlight methodological issues and make recommendations for future research priorities.

Taking the studies as a whole, the evidence that human capital increases productivity is compelling, though still largely divided on whether the stock of education affects the long-run level or growth rate of GDP. A one-year increase in average education is found to raise the level of output per capita by between three and six percent according to augmented neo-classical specifications, while leading to an over one percentage point faster growth according to estimates from the new-growth theories. Still, over the short-run planning horizon (four years) the empirical estimates of the change in GDP are of similar orders of magnitude in the two approaches. The impact of increases at different levels of education appear to depend on the level of a country's development, with tertiary education being the most important for growth in OECD countries. Education is found to yield additional indirect benefits to growth. More preliminary evidence seems to indicate that type, quality and efficiency of education matter for growth too.

Suggested Citation

Sianesi, Barbara and Van Reenen, John Michael, The Returns to Education: Macroeconomics. Journal of Economic Surveys, Vol. 17, pp. 157-200, April 2003. Available at SSRN: https://ssrn.com/abstract=416649

Barbara Sianesi (Contact Author)

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

IZA Institute of Labor Economics

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

HOME PAGE: http://www.iza.org/

John Michael Van Reenen

London School of Economics - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 6976 (Phone)
+44 20 7955 6848 (Fax)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom
+44 20 7240 6740 (Phone)
+44 20 7240 6136 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
25
Abstract Views
3,073
PlumX Metrics