DP8683 The Contribution of Schooling in Development Accounting: Results from a Nonparametric Upper Bound

Author(s): Francesco Caselli, Antonio Ciccone
Publication Date: December 2011
Date Revised: September 2012
Keyword(s): Development accounting, imperfect substitution, schooling
JEL(s): I25, O11
Programme Areas: International Macroeconomics, Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8683

How much would output increase if underdeveloped economies were to increase their levels of schooling? We contribute to the development accounting literature by describing a non-parametric upper bound on the increase in output that can be generated by more schooling. The advantage of our approach is that the upper bound is valid for any number of schooling levels with arbitrary patterns of substitution/complementarity. Another advantage is that the upper bound is robust to certain forms of endogenous technology response to changes in schooling. We also quantify the upper bound for all economies with the necessary data, compare our results with the standard development accounting approach, and provide an update on the results using the standard approach for a large sample of countries.