Measurement Error in Education and Growth Regressions

CESifo Working Paper Series No. 1677

IZA Discussion Paper No. 1165

Tinbergen Institute Discussion Paper No. TI 2004-040/3

33 Pages Posted: 16 Apr 2004

See all articles by Miguel Portela

Miguel Portela

University of Minho; IZA Institute of Labor Economics

Rob Alessie

Utrecht University - School of Economics; VU University Amsterdam - Department of Economics

Coen N. Teulings

University of Amsterdam; University of Cambridge

Multiple version iconThere are 3 versions of this paper

Date Written: February 2006

Abstract

The perpetual inventory method used for the construction of education data per country leads to systematic measurement error. This paper analyses the effect of this measurement error on GDP regressions. There is a systematic difference in the education level between census data and observations constructed from enrolment data. We discuss a methodology for correcting the measurement error. The standard attenuation bias suggests that using these corrected data would lead to a higher coefficient. Our regressions reveal the opposite. We discuss why the measurement error yields an overestimation. Our analysis contributes to an explanation of the difference between regressions based on 5 and on 10 year first differences.

Keywords: growth, education, measurement error

JEL Classification: I2, O4

Suggested Citation

Portela, Miguel and Alessie, R.J.M. (Rob) and Teulings, Coen N., Measurement Error in Education and Growth Regressions (February 2006). CESifo Working Paper Series No. 1677; IZA Discussion Paper No. 1165; Tinbergen Institute Discussion Paper No. TI 2004-040/3. Available at SSRN: https://ssrn.com/abstract=530582

Miguel Portela (Contact Author)

University of Minho ( email )

Braga, 4700
Portugal

IZA Institute of Labor Economics

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

R.J.M. (Rob) Alessie

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands
31 30 253 9814 (Phone)
31 30 253 7373 (Fax)

HOME PAGE: http://www2.econ.uu.nl/users/alessie/

VU University Amsterdam - Department of Economics ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands
+31 20 444 6047 (Phone)
+31 20 444 6005 (Fax)

Coen N. Teulings

University of Amsterdam ( email )

Spui 21
Amsterdam, 1018 WB
Netherlands

University of Cambridge ( email )

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

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