Human Capital and Growth in OECD Countries: The Role of Public Expenditure on Education

Abstract

Buysse’s paper reviews the empirical literature bearing on the relationship between the stock of human capital and economic growth and examines the contribution of government expenditure in education to long term growth in 20 OECD countries using panel data regressions. Controlling for the average years of education, countries which invest relatively more on education appear to raise the productivity of their human capital. Contrary to previous studies, the results do not indicate significant effects on economic growth of the ratio of students to teachers. While the paper is an accurate and careful empirical investigation, it shares with all other empirical studies of the determinants of growth a number of factors which could affect the robustness of its results. Among these factors, as pointed out by the author, there are the problems stemming from omitted variables, poor quality and limited length of data and model uncertainty.