Education and Economic Growth: an Empirical Analysis of Nonlinearities
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Education and Economic Growth: an Empirical Analysis of NonlinearitiesDate
2019Citation
Marquez-Ramos, L. & Mourelle, E. (2019). Education and economic growth: an empirical analysis of nonlinearities. Applied Economic Analysis, 27 (79), 21-45. Doi: 10.1108/AEA-06-2019-0005
Abstract
[Abstract] Purpose – Might a country’s economic growth performance differ depending on the evolution of its human
capital? This paper aims to consider education as a channel for human capital improvement and then for
economic growth. The authors hypothesize the existence of a threshold for education, after which point the
characteristics of economic growth change.
Design/methodology/approach – To address this question, the authors turn from a linear framework
to a nonlinear one by applying smooth transition specifications.
Findings – This empirical analysis for Spain points to the existence of nonlinearities in the relationship
between education and economic growth at country level, for both secondary and tertiary education. Next, as
different patterns emerge in different regions, the authors provide a regional analysis for a number of
representative Spanish regions. The results show that both secondary and tertiary education matter for
economic growth and that nonlinearities in this relationship should be taken into account.
Practical implications – What is learnt from using Smooth Transition Regression models for the
education-economic growth link is that the educational level of the population can be understood as a source
of nonlinearities in the economic activity of a country (and of a region). Thus, depending on national and
regional educational levels, economic growth behaves differently.
Originality/value – Although the importance of nonlinearities has been identified, linearity is usually
assumed in this field of the literature. This paper calls into question the linearity assumption by using time
series techniques for 1971-2013 in Spain, an OECD country, and testing whether the results at country level
hold for different regions within Spain as a robustness check.
Keywords
Education
Economic growth
Nonlinearities
Economic growth
Nonlinearities
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Rights
Atribución 4.0
ISSN
2632-7627