Angel de la Fuente and Rafael Domenech
Growth economists have spent more than forty years slowing chipping away at the Solow
residual, largely by attributing increasingly larger chunks of it to investment in human
capital. A few years ago we were reasonably certain that this was the way to go. But an
increasing number of studies seem to be telling us that the effect of schooling variables
on productivity vanishes when we turn to what seem to be the appropriate econometric
techniques for the purpose of estimating growth equations. Should we take these results at
face value? Before we do so and abandon the only workable models we have, it seems
sensible to search for ways to reconcile recent empirical findings with some kind of
plausible theory. In this paper we argue that we can make a fair amount of progress in
this direction by combining two ingredients: better data on human capital, and a further
extension of the human capital-augmented neoclassical model that allows for cross-country
productivity differentials and for technological diffusion. [PDF document] [Data]
PDF
Document
Educational Attainment in the OECD,
1960-1995: This document describes the construction of series on the educational
attainment of the adult population in a sample of 21 OECD countries for the period
1960-95.
Spreadsheet
with the data
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