IDEAS home Printed from https://ideas.repec.org/a/gam/jecomi/v10y2022i4p89-d790598.html
   My bibliography  Save this article

Empirical Analysis of the Impact of Education on Economic Growth

Author

Listed:
  • Besime Fekri Ziberi

    (Faculty of Economics, AAB College, 10000 Prishtina, Kosovo)

  • Donat Rexha

    (Faculty of Economics, AAB College, 10000 Prishtina, Kosovo)

  • Xhemazie Ibraimi

    (Faculty of Law, AAB College, 10000 Prishtina, Kosovo)

  • Besnik Avdiaj

    (Faculty of Economy, University of Prishtina, 10000 Prishtina, Kosovo)

Abstract

Education is a crucial factor for sustainable economic growth. Therefore, public expenditures on education are of great interest to both researchers and policy makers. The channels through which education affects economic growth differ according to the level of development of the country. This study aims to measure the impact of public expenditure on education for economic growth in North Macedonia. The data used are secondary data derived from the World Bank Indicators for the period 1917–2020. The econometric model employed in this study is an Instrumental Variable Two-Stage Least Square. The dependent variable in the model is Gross Domestic Product and the independent variables in the model are public expenditures on education, labor force participation rate, gross capital formation, unemployment, industry, wages, employment, information, and communication technology, and the instrumented variable is tertiary enrolment. This study suggests that a one-point increase in public expenditures on education will positively affect economic growth in the North Macedonia. The study also shows that a one-point increase in unemployment will increase economic growth and a one-point decrease in employment will increase economic growth in North Macedonia. These two results, which contradict the theoretical and empirical approaches, prove the mismatch between the supply and demand of real occupations in the labor market in North Macedonia.

Suggested Citation

  • Besime Fekri Ziberi & Donat Rexha & Xhemazie Ibraimi & Besnik Avdiaj, 2022. "Empirical Analysis of the Impact of Education on Economic Growth," Economies, MDPI, vol. 10(4), pages 1-10, April.
    • Handle: RePEc:gam:jecomi:v:10:y:2022:i:4:p:89-:d:790598
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7099/10/4/89/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7099/10/4/89/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Paul A. Samuelson & Robert M. Solow, 1956. "A Complete Capital Model Involving Heterogeneous Capital Goods," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(4), pages 537-562.
    2. Bexheti, Abdylmenaf & Mustafi, Besime, 2015. "Impact of public funding of education on economic growth in Macedonia," BERG Working Paper Series 98, Bamberg University, Bamberg Economic Research Group.
    3. Laura Marquez-Ramos & Estefanía Mourelle, 2019. "Education and economic growth: an empirical analysis of nonlinearities," Applied Economic Analysis, Emerald Group Publishing Limited, vol. 27(79), pages 21-45, August.
    4. Marijn Verhoeven & Mr. Sanjeev Gupta & Mr. Erwin H Tiongson, 1999. "Does Higher Government Spending Buy Better Results in Education and Health Care?," IMF Working Papers 1999/021, International Monetary Fund.
    5. Łukasz Goczek & Ewa Witkowska & Bartosz Witkowski, 2021. "How Does Education Quality Affect Economic Growth?," Sustainability, MDPI, vol. 13(11), pages 1-22, June.
    6. Agung Suwandaru & Thamer Alghamdi & Nurwanto Nurwanto, 2021. "Empirical Analysis on Public Expenditure for Education and Economic Growth: Evidence from Indonesia," Economies, MDPI, vol. 9(4), pages 1-13, October.
    7. Dmitriy Kovtun & Alexis Meyer-Cirkel & Ms. Zuzana Murgasova & Mr. Dustin Smith & Suchanan Tambunlertchai, 2014. "Boosting Job Growth in the Western Balkans," IMF Working Papers 2014/016, International Monetary Fund.
    8. Friedman, Milton, 2008. "Milton Friedman on Economics," University of Chicago Press Economics Books, University of Chicago Press, number 9780226263496, January.
    9. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    10. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 3-22, Winter.
    11. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    12. Andrews,Donald W. K. & Stock,James H. (ed.), 2005. "Identification and Inference for Econometric Models," Cambridge Books, Cambridge University Press, number 9780521844413, November.
    13. Mr. Emanuele Baldacci & Mr. Larry Q Cui & Mr. Benedict J. Clements & Mr. Sanjeev Gupta, 2004. "Social Spending, Human Capital, and Growth in Developing Countries: Implications for Achieving the MDGs," IMF Working Papers 2004/217, International Monetary Fund.
    14. Glenda Quintini, 2011. "Right for the Job: Over-Qualified or Under-Skilled?," OECD Social, Employment and Migration Working Papers 120, OECD Publishing.
    15. Biagi, Federico & Lucifora, Claudio, 2008. "Demographic and education effects on unemployment in Europe," Labour Economics, Elsevier, vol. 15(5), pages 1076-1101, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Larissa M. Batrancea & Mehmet Ali Balcı & Ömer Akgüller & Lucian Gaban, 2022. "What Drives Economic Growth across European Countries? A Multimodal Approach," Mathematics, MDPI, vol. 10(19), pages 1-20, October.
    2. Gökçe Tekin Turhan & Pınar Tokal & Gamze Sart, 2023. "The Role of Financial Sector Development and Educational Attainment in the Achievement of Economic Sustainability: Evidence from BRICS Economies," Sustainability, MDPI, vol. 15(6), pages 1-18, March.
    3. Sidan Li & Shibing You & Duochenxi Liu & Yukun Wang, 2023. "National Quality and Sustainable Development: An Empirical Analysis Based on China’s Provincial Panel Data," Sustainability, MDPI, vol. 15(6), pages 1-22, March.
    4. Yue Xu & Zihao Xu & Dayu Zhai & Yanyu Li, 2023. "Effects of Higher Education on Green Eco-Efficiency and Its Optimization Path: Case Study of China," Sustainability, MDPI, vol. 15(18), pages 1-19, September.
    5. Roldán Villela & Juan Jacobo Paredes, 2022. "Empirical Analysis on Public Expenditure for Education, Human Capital and Economic Growth: Evidence from Honduras," Economies, MDPI, vol. 10(10), pages 1-13, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Roldán Villela & Juan Jacobo Paredes, 2022. "Empirical Analysis on Public Expenditure for Education, Human Capital and Economic Growth: Evidence from Honduras," Economies, MDPI, vol. 10(10), pages 1-13, October.
    2. Turnovsky, S., 2000. "Growth in an Open Economy: some Recent Developments," Papers 5, Warwick - Development Economics Research Centre.
    3. Aysit Tansel & Ceyhan Ozturk & Erkan Erdil, 2021. "The Impact of Body Mass Index on Growth, Schooling, Productivity, and Savings: A Cross-Country Study," Koç University-TUSIAD Economic Research Forum Working Papers 2118, Koc University-TUSIAD Economic Research Forum.
    4. repec:ebl:ecbull:v:2:y:2002:i:1:p:1-15 is not listed on IDEAS
    5. Terutomo Ozawa & Sergio Castello, 2001. "Toward an 'International Business' Paradigm of Endogenous Growth: Multinationals and Governments as Co-Endogenisers," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 8(2), pages 211-228.
    6. Fiseha Gebregziabher & Miguel Niño-Zarazúa, 2014. "Social Spending and Aggregate Welfare in Developing and Transition Economies," WIDER Working Paper Series wp-2014-082, World Institute for Development Economic Research (UNU-WIDER).
    7. Taylor, Alan M., 1999. "Sources of convergence in the late nineteenth century," European Economic Review, Elsevier, vol. 43(9), pages 1621-1645, October.
    8. Agénor, Pierre-Richard & Neanidis, Kyriakos C., 2015. "Innovation, public capital, and growth," Journal of Macroeconomics, Elsevier, vol. 44(C), pages 252-275.
    9. Simon Wiederhold, 2012. "The Role of Public Procurement in Innovation: Theory and Empirical Evidence," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 43.
    10. Gebregziabher, Fiseha & Niño-Zarazúa, Miguel, 2014. "Social spending and aggregate welfare in developing and transition economies," WIDER Working Paper Series 082, World Institute for Development Economic Research (UNU-WIDER).
    11. Ese Urhie, 2014. "Public Education Expenditure and Economic Growth in Nigeria: A Disaggregated Approach," Journal of Empirical Economics, Research Academy of Social Sciences, vol. 3(6), pages 370-382.
    12. Iritié, B. G. Jean-Jacques, 2014. "Enjeux des politiques industrielles basées sur les clusters d'innovation: cas des pôles de compétitivité [Issues of Innovative Clusters-based Industrial Policy: Case of Pole of Competitiveness]," MPRA Paper 54429, University Library of Munich, Germany.
    13. Aykut Kibritçioglu, 2002. "On the Smithian origins of "new" trade and growth theories," Economics Bulletin, AccessEcon, vol. 2(1), pages 1-15.
    14. repec:rre:publsh:v:34:y:2004:i:1:p:72-94 is not listed on IDEAS
    15. Marta Simões & Adelaide Duarte & João Sousa Andrade, 2014. "Assessing the Impact of the Welfare State on Economic Growth: A Survey of Recent Developments," GEMF Working Papers 2014-20, GEMF, Faculty of Economics, University of Coimbra.
    16. Friday Ebong & Fidelis Ogwumike & Udeme Udongwo & Olumide Ayodele, 2016. "Impact of Government Expenditure on Economic Growth in Nigeria: A Disaggregated Analysis," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 3(1), pages 113-121.
    17. Stojkov, Aleksandar, 2009. "The benefits and risks of financial globalisation: evidence from the European transition economies," SEER Journal for Labour and Social Affairs in Eastern Europe, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 12(3), pages 369-389.
    18. Long, N.V. & Wong, K.Y., 1996. "Endogenous Growth and International Trade: A Survey," Working Papers 96-07, University of Washington, Department of Economics.
    19. Jamee K. Moudud, 2010. "Strategic Competition, Dynamics, and the Role of the State," Books, Edward Elgar Publishing, number 4241, Summer.
    20. Erić Ognjen, 2018. "Education and Economic Growth of the Western Balkans Countries," Economics, Sciendo, vol. 6(2), pages 27-35, December.
    21. Chandril Bhattacharyya & Dibyendu Maiti, 2023. "Informal Sector, Innovation and Growth," Working papers 334, Centre for Development Economics, Delhi School of Economics.
    22. Marcel Ševela, 2011. "International trade and endogenous growth: the case of Czech economy," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 59(2), pages 333-338.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jecomi:v:10:y:2022:i:4:p:89-:d:790598. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.