Estimating the permanent growth effects of human capital

Abstract

This article estimates with the Least Trimmed Least Squares (LTS) a specification suitable to estimate the permanent growth effects of human capital, using educational attainment (H) as a proxy. Our results show that H has significant permanent growth effects but these are much smaller than in Temple (1999).

Keywords:

• least trimmed squares
• human capital
• educational attainment
• permanent growth effects

JEL Classification:

• O15
• O40

Notes

¹ When the 1965 or the averages of 1965 and 1985 values are used for the levels of the variables, we obtained similar estimates. To classify countries into industrial and developing countries, we used per-worker incomes. Countries with less than $6500 per worker are classified as developing countries. This tallies with the list of countries classified by the World Bank for concessional prices for its publications with a couple of minor exceptions.