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Measurement Error in Education and Growth Regressions

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  • Miguel Portela
  • Rob Alessie
  • Coen Teulings

Abstract

The use of the perpetual inventory method for the construction of education data per country leads to systematic measurement error. This paper analyzes its effect on growth regressions. We suggest a methodology for correcting this error. The standard attenuation bias suggests that using these corrected data would lead to a higher coefficient. Our regressions reveal the opposite. We discuss why this is the case.

Suggested Citation

  • Miguel Portela & Rob Alessie & Coen Teulings, 2010. "Measurement Error in Education and Growth Regressions," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(3), pages 618-639, September.
    • Handle: RePEc:bla:scandj:v:112:y:2010:i:3:p:618-639
    DOI: 10.1111/j.1467-9442.2010.01613.x
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    Cited by:

    1. Ashley, Richard A. & Parmeter, Christopher F., 2015. "When is it justifiable to ignore explanatory variable endogeneity in a regression model?," Economics Letters, Elsevier, vol. 137(C), pages 70-74.
    2. Tiago Neves Sequeira & Nuno Ferraz, 2008. "Is Education prejudiced by Country-Risk? A Panel-Data Study using Attainment Data and Country-Risk as a Rational Expectation," Working Papers de Gestão, Economia e Marketing (Management, Economics and Marketing Working Papers) e01/2008, Universidade da Beira Interior, Departamento de Gestão e Economia (Portugal).
    3. Christian Morrisson & Fabrice Murtin, 2009. "The Century of Education," Journal of Human Capital, University of Chicago Press, vol. 3(1), pages 1-42.
    4. Coen Teulings & Thijs van Rens, 2008. "Education, Growth, and Income Inequality," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 89-104, February.
    5. Zahra Sheidaei & Mohammadnabi Shahiki Tash, 2014. "The Cumulative Effect of Human Capital on Economic Growth: Using Panel Data Method," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 17(52), pages 95-115, June.
    6. Maté Fodor & Jean Luc De Meulemeester & Denis Rochat, 2019. "The Wavering Economic Thought About The Link Between Education And Growth," Working Papers CEB 19-006, ULB -- Universite Libre de Bruxelles.
    7. Mazhar Yasin MUGHAL & Natalia VECHIU, 2010. "The role of Foreign Direct Investment in higher education in the developing countries (Does FDI promote education?)," Working Papers 2010-2011_10, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Nov 2010.
    8. Uwe Sunde & Thomas Vischer, 2015. "Human Capital and Growth: Specification Matters," Economica, London School of Economics and Political Science, vol. 82(326), pages 368-390, April.
    9. Michael S. Delgado & Daniel J. Henderson & Christopher F. Parmeter, 2014. "Does Education Matter for Economic Growth?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 76(3), pages 334-359, June.
    10. Yamarik Steven J, 2008. "Estimating Returns to Schooling from State-Level Data: A Macro-Mincerian Approach," The B.E. Journal of Macroeconomics, De Gruyter, vol. 8(1), pages 1-16, August.
    11. Yvonne McCarthy & Kieran McQuinn, 2016. "Attenuation Bias, Recall Error and the Housing Wealth Effect," Kyklos, Wiley Blackwell, vol. 69(3), pages 492-517, August.
    12. Bas van Leeuwen & Peter Földvári, 2013. "Capital Accumulation and Growth in Central Europe, 1920-2006," Eastern European Economics, Taylor & Francis Journals, vol. 51(5), pages 69-93, September.
    13. Domicián MÁTÉ & Éva DARABOS & Krisztina DAJNOKI, 2016. "The Impact Of Human Capital On Labour Productivity Regarding ‘Et 2020’ Targets," Network Intelligence Studies, Romanian Foundation for Business Intelligence, Editorial Department, issue 7, pages 61-67, June.
    14. Peter Foldvari & Bas van Leeuwen, 2009. "An alternative interpretation of 'average years of education' in growth regressions," Applied Economics Letters, Taylor & Francis Journals, vol. 16(9), pages 945-949.
    15. Bas Van Leeuwen & Peter Foldvari, 2008. "Human Capital and Economic Growth in Asia 1890–2000: A Time‐series Analysis," Asian Economic Journal, East Asian Economic Association, vol. 22(3), pages 225-240, September.
    16. Tiago Sequeira & Elsa Martins, 2008. "Education public financing and economic growth: an endogenous growth model versus evidence," Empirical Economics, Springer, vol. 35(2), pages 361-377, September.
    17. Bergheim, Stefan, 2007. "Pair-wise cointegration in long-run growth models," Research Notes 24, Deutsche Bank Research.
    18. Péter Földvári & Bas van Leeuwen, 2014. "Educational and income inequality in Europe, ca. 1870–2000," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 8(3), pages 271-300, September.
    19. Raifu, Isiaka, 2019. "Economic growth in Africa: Does gender education still matter?," MPRA Paper 92916, University Library of Munich, Germany.
    20. Joachim Ragnitz & Stefan Eichler & Beate Henschel & Harald Lehmann & Carsten Pohl & Lutz Schneider & Helmut Seitz & Marcel Thum, 2007. "Die demographische Entwicklung in Ostdeutschland : Gutachten im Auftrag des Bundesministeriums für Wirtschaft und Technologie," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 41, May.

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    More about this item

    JEL classification:

    • I2 - Health, Education, and Welfare - - Education
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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