Higher Educational Attainment for Growth: The MRW Model for Iceland

ABSTRACT

This study evaluates Mankiw, Romer and Weil’s augmented neoclassical growth model with human capital for Iceland. Moreover, we differentiate between the impact of upper-secondary and tertiary education. Both unrestricted and restricted regressions show that human capital stimulates real GDP per capita changes. The value of the elasticity of output with respect to human capital proxies calculated by OLS as well as DOLS ranges between 0.22 and 0.47, which is fully compatible with that calculated by the relevant studies on advanced economies applying the same methodology. The regression output is robust to modifications of the baseline model and the method of estimation.

KEYWORDS:

• Human capital
• secondary education
• tertiary education
• neoclassical growth model

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Mariya Neycheva http://orcid.org/0000-0001-6738-6946

Kári Joensen http://orcid.org/0000-0002-4077-1235

Notes

1 We are indebted to the Editor as well as three anonymous referees for their helpful comments and suggestions.

Additional information

Funding

This work was supported by BG09 Programme “Scholarships Fund of the European Economic Area” [grant number D04-96/21.03.2015].