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Exploring the linkage between human capital and economic growth: A look at 141 developing and developed countries

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  • Sultana, Tanzila
  • Dey, Sima Rani
  • Tareque, Mohammad

Abstract

As a factor of production, human capital is defined both in its health and educational dimensions, incorporating qualitative and quantitative aspects. Using a panel of 141 countries (93 developing and 48 developed), we attempt to explore and compare the impact of human capital on economic growth at different development stages. For our estimation, we employ the System Generalized Methods of Moments (SGMM) for the period 1980–2008. Our findings reveal that all aspects of human capital positively influence growth in developing countries, especially life expectancy gain, which may be explained by the demographic transition these countries are going through. However, the scenario is different for developed countries, where increased life expectancy posits a drag on economic growth, probably because of the increasingly aging population and dependency ratio. Only when life expectancy is omitted does health expenditure, along with other educational measures of human capital, help sustain growth in developed countries.

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  • Sultana, Tanzila & Dey, Sima Rani & Tareque, Mohammad, 2022. "Exploring the linkage between human capital and economic growth: A look at 141 developing and developed countries," Economic Systems, Elsevier, vol. 46(3).
    • Handle: RePEc:eee:ecosys:v:46:y:2022:i:3:s0939362522000796
    DOI: 10.1016/j.ecosys.2022.101017
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    More about this item

    Keywords

    Human capital; Qualitative; Quantitative; Economic growth; Developing; Developed;
    All these keywords.

    JEL classification:

    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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