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Title: Human Capital in Growth Regressions: How Much Difference Does Data Quality Make? An Update and Further Results

Author(s): Angel de la Fuente and Rafael Dom�nech

Publication Date: October 2002

Keyword(s): growth, human capital and measurement error

Programme Area(s): International Macroeconomics

Abstract: We construct estimates of educational attainment for a sample of OECD countries using previously unexploited sources. We follow a heuristic approach to obtain plausible time profiles for attainment levels by removing sharp breaks in the data that seem to reflect changes in classification criteria. We then construct indicators of the information content of our series and a number of previously available data sets and examine their performance in several growth specifications. We find a clear positive correlation between data quality and the size and significance of human capital coefficients in growth regressions. Using an extension of the classical errors in variables model, we construct a set of meta-estimates of the coefficient of years of schooling in an aggregate Cobb-Douglas production function. Our results suggest that, after correcting for measurement error bias, the value of this parameter is well above 0.50.

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Bibliographic Reference

de la Fuente, A and Dom�nech, R. 2002. 'Human Capital in Growth Regressions: How Much Difference Does Data Quality Make? An Update and Further Results'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=3587