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Education and productivity in developing countries : an aggregate production function approach

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Author Info
Lau, Lawrence J.
Jamison, Dean T.
Louat, Frederic F.

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Abstract

The estimated rates of return to education are typically (often considerably) above 10 percent a year in real terms - a respectable rate of return. The rates of return are highest for primary education, and higher in countries where educated manpower is scarcer, and the durability of educational capital can be as high as 50 years. The effect of education on real output has not been well documented. The authors have pooled data on 58 developing countries, from 1960 through 1986, to estimate an aggregate production function using as independent variables the quantities of capital, labor, land, average educational attainment of the labor force, and chronological time. They measured the percentage change in a region's real GDP in response to an increase of one year in the average educational attainment of the working age population in 1985. The estimated effects range from negative to more than 5 percent a year. The results suggest : a) a positive relationship between the level of primary schooling achieved and the size of its effect; b) a threshold of four years of schooling before primary school has an effect; and c) the effect of secondary education seems to be independent of the level of secondary schooling attained, although local factors may predominate here. The authors conclude that education is an important determinant of aggregate real output and productivity but that its effect varies considerably across countries and regions.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 612.

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Date of creation: 31 Mar 1991
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Handle: RePEc:wbk:wbrwps:612

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Related research
Keywords: Economic Theory&Research; Environmental Economics&Policies; Economic Growth; Curriculum&Instruction; Teaching and Learning;

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  1. Philippe Hugon, 2005. "La scolarisation et l'éducation : facteurs de croissance ou catalyseurs du développement ?," Mondes en développement, De Boeck Université, vol. 132(4), pages 13-28. [Downloadable!]
  2. Robert J. Barro & Jong-Wha Lee, 1993. "International Comparisons of Educational Attainment," NBER Working Papers 4349, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. de la Fuente, Angel & Doménech, Rafael, 2002. "Human Capital in Growth Regressions: How Much Difference Does Data Quality Make? An Update and Further Results," CEPR Discussion Papers 3587, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. Ralf Müller, 2000. "Humankapital in der Transformation - Das Beispiel der neuen Länder," IWH Discussion Papers 126, Halle Institute for Economic Research. [Downloadable!]
  5. Trinh Le & John Gibson & Les Oxley, 2005. "Measures of human capital: A review of the literature," Treasury Working Paper Series 05/10, New Zealand Treasury. [Downloadable!]
  6. Robert J. Barro & Jong-Wha Lee, 2000. "International Data on Educational Attainment Updates and Implications," NBER Working Papers 7911, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. ?gel de la Fuente & Rafael Dom?ech, . "Human Capital In Growth Regressions: How Much Difference Does Data Quality Make?," UFAE and IAE Working Papers 446.00, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
    Other versions:
  8. Rodney Ramcharan, 2002. "Columbia or High School? Understanding the Roles of Education in Development," IMF Working Papers 02/36, International Monetary Fund. [Downloadable!]
  9. Arcand Jean-Louis & Béatrice d'Hombres, 2005. "Explaining the Negative Coefficient Associated with Human Capital in Augmented Solow Growth Regressions," Macroeconomics 0510010, EconWPA. [Downloadable!]
    Other versions:
  10. Floribert Ngaruko, 2003. "Agricultural Export Performance in Africa: Elements of comparison with Asia," Working Papers 03-09, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA). [Downloadable!]
  11. Boris Bravo & Horacio Cocchi & Daniel Solís, 2006. "Adoption of Soil Conservation Technologies in El Salvador: A cross-Section and Over-Time Analysis," OVE Working Papers 1806, Inter-American Development Bank, Office of Evaluation and Oversight (OVE). [Downloadable!]
  12. Constantina Kottaridi & Thanasis Stengos, 2008. "Foreign Direct Investment, human capital and non-linearities in economic growth," Working Papers 019, University of Peloponnese, Department of Economics. [Downloadable!]
    Other versions:
  13. Ruth Judson, 1996. "Do low human capital coefficients make sense? A puzzle and some answers," Finance and Economics Discussion Series 96-13, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  14. Simon Appleton & John Hoddinott & John MacKinnon, 1996. "Education and health in sub-Saharan Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 8(3), pages 307-339.
  15. Boris Bravo & Horacio Cocchi & Daniel Solís, 2006. "Output Diversification Among Small-Scale Hillside Farmers In El Salvador," OVE Working Papers 1706, Inter-American Development Bank, Office of Evaluation and Oversight (OVE). [Downloadable!]
  16. Cocchi, Horacio & Bravo-Ureta, Boris & Quiroga, Ricardo, 2004. "Farm Benefits And Natural Resource Projects In Honduras And El Salvador," 2004 Annual meeting, August 1-4, Denver, CO 20328, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
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