Human Capital and Economic Growth

The purpose of this book is to analyze the relationship between human capital and economic growth as recent studies cast doubt on the importance of this factor input. Researchers in the field argue that this finding is likely due to imperfect measures of human capital. Therefore, the accumulation of human capital and its measurement are evaluated before addressing the relationship of the two variables in an empirical setting. The book proceeds as follows: First, the variables relevant to the decision-making process of human capital investment are tested in a binary probit model. Second, the book shows that it is possible to construct a more accurate measure of human capital by considering a labor supply and demand framework. Finally, the performance of the newly derived measure is tested empirically in growth regressions with least squares dummy variable estimators as well as general method of moments techniques. The book should advance the discussion of the relevance of human capital and serves as a starting point for researchers and professionals who may be studying educational improvements and skill developments of the labor force in aggregate economies.