Human Capital in the World Barbara Liberda Development Economics 2007/2008 Lecture 7-8

Cross national data show no association between increases in educational capital due to rising educational attainment of the labor force and the rate of growth of output per worker This implies the association of growth of educational capital and conventional measures of TFP is large, strongly statistically significant, and negative While these are the regression results “on average” (from imposing a constant coefficient) it should be obvious the impact of education has not been the same in every country (Lant Pritchett)

There are three explanations for why the impact of education has varied and has so often fallen short of what was hoped First, perhaps educational has been so low that “years of schooling” have created no human capital Second, perhaps the marginal returns to education fell rapidly as supply expanded while demand for educated labor was stagnant Third, perhaps the institutional environment has been sufficiently perverse that the educational capital accumulation lowered economic growth Some mix of the three explanations plays a role in most developing countries. ----Barro, Lee data on Educational Attainment