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Do Cognitive Skills Impact Growth or Levels of GDP per Capita
1 : University of Haifa
2 : Interdisciplinary Center [Israël]
(IDC)
-
Website
Interdisciplinary Center (IDC) P.O.Box 167 Herzliya, 46150, Israel -
Israel
3 : Shenkar Engineering. Design. Art
The Great Recession has raised concerns about future economic growth. A possible remedy that was suggested was an educational reform, which will increase the stock of high skilled workers. In this paper we test if such a reform has a level or a growth rate effect. Focusing on this question, we construct a variant standard growth model in which human capital has theoretically both a level and growth rate effects by assumption. Estimating this model using standard cross-country data and panel data, human capital measured by the methodology of Hanushek and Woessmann (2015) has a significant level effect on GDP per worker but not a growth effect. Therefore, the human capital improvement impact on economic growth is bounded.
