Measurement Error in Education and Growth Regressions

26 Pages Posted: 17 Nov 2004

See all articles by Rob Alessie

Rob Alessie

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

Miguel Portela

University of Minho; IZA Institute of Labor Economics

Coen N. Teulings

University of Amsterdam; University of Cambridge

Multiple version iconThere are 3 versions of this paper

Date Written: September 2004

Abstract

The perpetual inventory method used for the construction of education data per country leads to systematic measurement error. This paper analyzes 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 enrollment 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: I20, O40

Suggested Citation

Alessie, R.J.M. (Rob) and Portela, Miguel and Teulings, Coen N., Measurement Error in Education and Growth Regressions (September 2004). CEPR Discussion Paper No. 4637. Available at SSRN: https://ssrn.com/abstract=621550

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)

Miguel Portela

University of Minho ( email )

Braga, 4700
Portugal

IZA Institute of Labor Economics

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

Coen N. Teulings (Contact Author)

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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