The Augmented and Integrative Model of Economic Growth: Theoretical and Empirical Evidence from USA

Abstract

[Abstract]: The current nexus between education and economic growth leads us to propose a hybrid and integrated theoretical model. The variables chosen for this research were human capital and labour, and their impact on unemployment and economic growth was considered. In the validation of the theoretical model, different equations were contemplated, and the ARDL cointegration technique for its estimation was chosen. This study emphasizes the importance of technological progress, physical capital and human capital; the latter is measured by educational training and its interactive effect on employment and unemployment in explaining the behaviour of economic growth in the US from 1981-2019. The results show different statistica significance in the short and long term. These results corroborate the premise that there are partial adjustments in the short term, particularly after an economic crisis. In the long term, economic growth is affected by the positive or negative magnitudes of the product elasticity for each of the drivers considered. In terms of policy implications, a combination of structural and demand-driven policies must be implemented to reduce unemployment, in particular, to halt protracted economic recessions.