Human Capital in Economic Growth: A Review of Theory and Empirics (original) (raw)

A Literature Review of Human Capital and Economic Growth

Business and Economic Research, 2019

This work aims to examine the relationship between human capital and economic growth. The study analyzes datasets from previous works, reviews previous literature, and draws some conclusions on human capital and economic growth. The paper summarizes articles on human capital in terms of (i) the theoretical framework of economic growth theory, (ii) the neo-classical growth model, (iii) the Solow growth production-function, (iv) the new endogenous theory, and (v) empirical evidence on the relationship and causal link between human capital and economic growth. Assessing the literature on human capital and economic growth will serve as a comprehensive literature guide to policy formulation and implementation in the short-run and long-run of creating developmental goals for any region.

Human capital and growth

The American Economic Review, 2001

Since the late 1980's, much of the attention of macroeconomists has focused on the determinants of long-term economic growth. This paper emphasizes the role of education. The analysis distinguishes the quantity of education, measured by years of school attainment, from the quality, as gauged by scores on internationally comparable examinations. I. Basic Empirical Results on Growth

The Role of Human Capital in Economic Growth

In endogenous growth theories, with the endogeneity of technology and its inclusion into the model, the new technologies produced by individuals equipped with knowledge, skills, and experience by using this technology were regarded as the human capital investments of countries. Later, the effects of human capital on economic growth became a significant topic in the empirical literature. In this study, initially the basic approaches to human capital were theoretically investigated. Then, the relationships between human capital and economic growth were analyzed with cointegration and causality tests by using the data of Turkey for the period 1961-2011. Our findings revealed a dual causality relationship between human capital and economic growth variables.

Empirical Analysis of the effect of Human Capital generation on Economic Growth

Proceedings of the Proceedings of the 9th Annual International Conference on 4C’s-Communication, Commerce, Connectivity, Culture, SIMSARC 2018, 17-19 December 2018, Pune, MH, India, 2019

Last decade of 20th century faced a strong quest for the determinants of the rate of long run economic growth. Post-World War II, human capital emerged as an important and inevitable factor apart from other general factors that affect the rate of growth. Initially, enhancement in general education was encouraged to promote human capital, but presently, advancement in technological progress for skill development has gained special attention for its contribution to the formation of human capital. According to economists and existing theories of growth, a nation that invests in human capital generation should contribute positively in the process of economic growth. Human capital embodies qualities that are inherited as well as acquired through education and training. The returns to investment in human capital not only help individuals to enjoy personal growth but in addition affect the growth of the nation as an aggregate. Human capital enters into the production process through the participation of the labourers. The already existing labour productivity gets improved when subjected to skill improvement through technological knowledge building and on-the-job training. This further leads to a positive impact on the production of goods and services paving way for economic growth. But distribution of human capital has seen its shortcomings as well that has given rise to some of the major issues and challenges for policymakers. The firsts section of the paper observes the relationship that prevails between human capital and economic growth in the Indian economy based on panel data econometrics. The second section focusses mainly on the issues and challenges faced due to unequal distribution of human capital which gives rise to some major challenges like migration and brain drain which again negatively affects the growth of the nation.

A Human Capital Theory of Growth: New Evidence for an Old Idea

2014

In 1960 Theodore Schultz expounded a human capital theory of economic growth that includes three elements: 1) Countries without much human capital cannot manage physical capital effectively, 2) Economic growth can only proceed if physical capital and human capital rise together, and 3) Human capital is the factor most likely to limit growth. I specify Schultz’s theory mathematically and test it in periods when global financial capital was highly mobile. I find that in 1870, 1910, and 2000, the average schooling attainment of the adult population largely determined the stock of physical capital/capita and GDP/capita in 42 market economies.

Human capital accumulation andeconomic growth

Investigacion Economica, 2001

This paper examines how human capital a¤ects growth, considering the reverse impact or causation of growth on human capital accumulation. To analyze this s...

Human Capital and Economic Growth: Cross‐Section Evidence for OECD Countries

Economic Record, 2003

This paper explores the applicability of the Nelson-Phelps approach to the modelling of human capital in economic growth for the sample of OECD countries. A case is made for confining the approach to the technology diffusion component and for combining it with the Lucas approach. For such a hybrid model, both the favoured interpretation of the Nelson-Phelps approach, as well as the Lucas approach, are supported by the evidence. The sensitivity of the findings is assessed with regard to the use of alternative human capital data sets, including quality (adjusted) measures, and with regard to data outliers.

RELATIONSHIP BETWEEN HUMAN CAPITAL AND ECONOMIC GROWTH: AN APPLICATION TO DEVELOPING COUNTRIES

High and sustainable economic growth, that is an important indicator of life quality, is an essential condition in the realization of economic growth. In this regard, achieving strong economic growth in developing countries which mostly need development today, is one of the most debated topics. For many years, physical capital has been recognized as the most important determinant of economic growth. New approaches to economic growth have been developed since 1980s. In this context, according to endogenous growth theory, it is stated that the most important determinant of economic growth is the human capital stock. Today, while the subject of economic growth is examined, the effect of human capital on economic growth is intensively investigated. In this study, the impact of human capital on economic growth for selected 32 developing countries is investigated by panel data analysis method using data from the period 2000-2014. The focus of the study is also the direction and degree of effect of the increase in the level of education on economic growth. According to empirical analysis results, it is founded that human capital positively affects economic growth. It has also been found that its positive effect on economic growth has reduced while the education level has increased. On the other hand, the results of the analysis indicate that physical capital has a positive impact and that the labor negatively affects economic growth in the studied countries. However, it has been determined that the effect of human capital on economic growth is lower than that of physical capital.