Skip to main content Accessibility help
×
Home

EDUCATION, HEALTH, AND ECONOMIC DEVELOPMENT

  • Dong-Hyeon Kim (a1), Yi-Chen Wu (a2) and Shu-Chin Lin (a3)

Abstract

This paper examines the relationships of income with education and health using heterogeneous panel cointegration techniques to account for the potential cross-country heterogeneity in the effects of education and health. Our main results are: (i) education and health are, on average, income-enhancing; (ii) for different schooling levels, although primary education lowers income, both secondary and tertiary education raise income with larger impacts for the former than the latter, on average; (iii) there is considerable heterogeneity in the effects of education and health on income across countries; and (iv) the effect of education (health) on income tends to be greater (smaller) in countries with higher levels of development, greater (less) trade openness, less abundant natural resources, less corruption, higher levels of democracy, and a more homogeneous society.

Copyright

Corresponding author

Address correspondence to: Shu-Chin Lin, Department of Economics, SungKyunKwan University, 25-2 Sungkyunkwan-ro, Jongno-gu, Seoul 110-745, Republic of Korea; e-mail: sclin@skku.edu

Footnotes

Hide All

We thank two anonymous reviewers for helpful comments. The usual disclaimer applies.

Footnotes

References

Hide All
Acemoglu, D. and Johnson, S. (2007) Disease and development: The effect of life expectancy on economic growth. Journal of Political Economy 115, 925985.10.1086/529000
Acemoglu, D. and Robinson, J.A. (2006) Economic Origins of Dictatorship and Democracy. Cambridge, UK: Cambridge University Press.
Alesina, A., Devleescha, A., Easterly, W., Kurlat, S., and Wacziarg, R. (2003) Fractionalization. Journal of Economic Growth 8, 155194.10.1023/A:1024471506938
Baldacci, E., Clements, B., Gupta, S., and Cui, Q. (2008) Social spending, human capital, and growth in developing countries. World Development 36, 13171341.10.1016/j.worlddev.2007.08.003
Barro, R. (1991) Economic growth in a cross section of countries. Quarterly Journal of Economics 106, 407443.10.2307/2937943
Barro, R. (2001) Human capital and growth. American Economic Review 91, 1217.10.1257/aer.91.2.12
Becker, G.S., Murphy, K.M., and Tamura, R. (1990) Human capital, fertility, and economic growth. Journal of Political Economy 98, S12S37.10.1086/261723
Behrman, J.R. and Rosenzweig, M.R. (2004) Returns to birth weight. Review of Economics and Statistics 86, 586601.10.1162/003465304323031139
Benhabib, J. and Spiegel, M. (1994) The role of human capital in economic development: Evidence from aggregate cross country data. Journal of Monetary Economics 34, 143173.10.1016/0304-3932(94)90047-7
Bhargava, A., Jamison, D.T., Lau, L.J., and Murray, C.J.L. (2001) Modeling the effects of health on economic growth. Journal of Health of Economics 20, 423440.10.1016/S0167-6296(01)00073-X
Bils, M. and Klenow, P. (2000) Does schooling cause growth? American Economic Review 90, 11601183.10.1257/aer.90.5.1160
Bleakley, H. (2007) Disease and development: Evidence from hookworm eradication in the American South. Quarterly Journal of Economics 122, 73117.10.1162/qjec.121.1.73
Bloom, D.E., Canning, D., and Fink, G. (2014) Disease and development revisited. Journal of Political Economy 122, 13551366.10.1086/677189
Bloom, D.E., Canning, D., and Sevilla, J. (2004) The effect of health on economic growth: A production function approach. World Development 32, 113.10.1016/j.worlddev.2003.07.002
Brown, D. and Hunter, W. (2004) Democracy and human capital formation: Education spending in Latin America, 1980 to 1997. Comparative Political Studies 37, 842864.10.1177/0010414004266870
Brunello, G., Fort, M., Schneeweis, N., and Winter-Ebmer, R. (2016) The causal effect of education on health: What is the role of health behaviors? Health Economics 25, 314336.10.1002/hec.3141
Caselli, F., Esquivel, G., and Lefort, F. (1996) Reopening the convergence debate: A new look at cross-country empirics. Journal of Economic Growth 1, 363389.10.1007/BF00141044
Chudik, A., Pesaran, M.H., and Tosetti, E. (2011) Weak and strong cross-section dependence and estimation of large panels. Econometrics Journal 14, 4590.10.1111/j.1368-423X.2010.00330.x
Cohn, E. and Addison, J.T. (1998) The economic returns to lifelong learning in OECD countries. Education Economics 6, 253307.10.1080/09645299800000021
De la Croix, D. and Delavallade, C. (2009) Growth, public investment and corruption with failing institutions. Economics of Governance 10, 187219.10.1007/s10101-008-0057-4
Delgado, M.S., Henderson, D.J., and Parmeter, C.F. (2014) Does education matter for economic growth? Oxford Bulletin of Economics and Statistics 76, 334359.10.1111/obes.12025
Easterly, W. and Levine, R. (1997) Africa's growth tragedy: Policies and ethnic divisions. Quarterly Journal of Economics 112, 12031250.10.1162/003355300555466
Feenstra, R.C. and Hanson, G.H. (1997) Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras. Journal of International Economics 42, 371394.10.1016/S0022-1996(96)01475-4
Feenstra, R.C., Inklaar, R., and Timmer, M.P. (2013) The next generation of the Penn World Table. www.ggdc.net/pwt.
Fershtman, C., Murphy, K.M., and Weiss, Y. (1996) Social status, education, and growth. Journal of Political Economy 104, 108132.10.1086/262019
Galor, O. (2005) The demographic transition and the emergence of sustained economic growth. Journal of the European Economic Association 3, 494504.10.1162/jeea.2005.3.2-3.494
Gupta, S., Davoodi, H.R., and Tiongson, E.R. (2002) Corruption and the provision of health care and education services. In Abed, G.T. and Gupta, S. (eds.), Governance, Corruption and Economic Performance, pp. 245279. Washington, DC: International Monetary Fund.
Gylfason, T. (2001) Natural resources, education, and economic development. European Economic Review 45, 847859.10.1016/S0014-2921(01)00127-1
Gylfason, T., Herbertsson, T.T., and Zoega, G. (1999) A mixed blessing: Natural resources and economic growth. Macroeconomic Dynamics 3, 204225.10.1017/S1365100599011049
Hall, R.E. and Jones, C.I. (1999) Why do some countries produce so much more output per worker than others? Quarterly Journal of Economics 114, 83116.10.1162/003355399555954
Hall, S.G. and Milne, A. (1994) The relevance of p-star analysis to UK monetary policy. Economic Journal 104, 597–604.10.2307/2234634
Harmon, C., Oosterbeek, H., and Walker, I. (2003) The returns to education: Microeconomics. Journal of Economic Surveys 17, 115–155.10.1111/1467-6419.00191
Hartwig, J. (2010) Is health capital formation good for long-term economic growth? Panel Granger-causality evidence for OECD countries. Journal of Macroeconomics 32, 314–325.10.1016/j.jmacro.2009.06.003
Herzer, D., Strulik, H., and Vollmer, S. (2012) The long-run determinants of fertility: One century of demographic change 1900–1999. Journal of Economic Growth 17, 357–385.10.1007/s10887-012-9085-6
Heyneman, S.P., Anderson, K.H., and Nuraliyeva, N. (2008) The cost of corruption in higher education. Comparative Education Review 52, 125.10.1086/524367
Holly, S., Pesaran, M.H., and Yamagata, T. (2010) A spatio-temporal model of house prices in the USA. Journal of Econometrics 158, 160173.10.1016/j.jeconom.2010.03.040
Im, K.S., Pesaran, M.H., and Shin, Y. (2003) Testing for unit roots in heterogeneous panels. Journal of Econometrics 115, 5374.10.1016/S0304-4076(03)00092-7
Juselius, K. (2006) The Cointegrated VAR Model: Methodology and Applications. Oxford, UK: Oxford University Press.
Kalemli-Ozcan, S., Ryder, H.E., and Weil, D.N. (2000) Mortality decline, human capital investment and economic growth. Journal of Development Economics 62, 123.10.1016/S0304-3878(00)00073-0
Kao, C. and Chiang, M.H. (2000) On the estimation and inference of a cointegrated regression in panel data. Advances in Econometrics 15, 179222.10.1016/S0731-9053(00)15007-8
Kaufman, D., Kraay, A., and Zoido-Lobaton, P. (1999) Governance Matters. World Bank policy research working paper no. 2196.
Kaufman, R.R. and Segura-Ubiergo, A. (2001) Globalization, domestic politics, and social spending in Latin America. World Politics 53, 553587.10.1353/wp.2001.0016
Kim, S.-J. and Kim, Y.J. (2000) Growth gains from trade and education. Journal of International Economics 50, 519–145.10.1016/S0022-1996(99)00012-4
Kremer, M. and Miguel, E. (2004) Worms: Identifying impacts on education and health in the presence of treatment externalities? Econometrica 72, 159217.
Krueger, A. and Lindahl, M. (2001) Education for growth: Why and for whom? Journal of Economic Literature 39, 11011136.10.1257/jel.39.4.1101
Kurtz, M.J. and Brooks, S.M. (2011) Conditioning the resource curse: Globalization, human capital, and growth in oil-rich nations. Comparative Political Studies 44, 747770.10.1177/0010414011401215
LaPorta, R. Porta, R., Lopez-de-Silanes, F., Shleifer, A., and Vishny, R.W. (1999) The quality of government. Journal of Law, Economics and Organization 15, 222279.
Levine, D.I. and Rothman, D. (2006) Does trade affect child health? Journal of Health Economics 25, 538554.10.1016/j.jhealeco.2005.10.001
Lorentzen, P., McMillan, J., and Wacziarg, R. (2007) Death and development. Journal of Economic Growth 13, 81124.10.1007/s10887-008-9029-3
Lütkepohl, H. (2007) General-to-specific or specific-to-general modelling? An opinion on current econometric terminology. Journal of Econometrics 136, 319324.10.1016/j.jeconom.2005.11.014
Madsen, J.B. (2016) Health, human capital formation and knowledge production: Two centuries of international evidence. Macroeconomic Dynamics 20, 909953.10.1017/S1365100514000650
Mankiw, N.G., Romer, D., and Weil, D.N. (1992) A contribution to the empirics of economic growth. Quarterly Journal of Economics 107, 407437.10.2307/2118477
Mauro, P. (1998) Corruption and the composition of government expenditure. Journal of Public Economics 69, 263279.10.1016/S0047-2727(98)00025-5
McDonald, S. and Roberts, J. (2002) Growth and multiple forms of human capital in an augmented Solow model: A panel data investigation. Economics Letters 74, 271276.10.1016/S0165-1765(01)00539-0
Murphy, K.M., Simon, C.J., and Tamura, R. (2008) Fertility decline, baby boom and economic growth. Journal of Human Capital 2, 262302.10.1086/593052
Navia, P. and Zweifel, T.D. (2003) Democracy, dictatorship, and infant mortality revisited. Journal of Democracy 14, 90103.10.1353/jod.2003.0059
Pedroni, P. (2000) Critical values for cointegration tests in heterogeneous cointegrated panels. Oxford Bulletin of Economics and Statistics 61, 653670.10.1111/1468-0084.61.s1.14
Pedroni, P. (2001) Fully modified OLS for heterogeneous cointegrated panels. Advances in Econometrics 15, 93130.10.1016/S0731-9053(00)15004-2
Pedroni, P. (2004) Panel cointegration: Asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Econometric Theory 20, 597627.10.1017/S0266466604203073
Pedroni, P. (2007) Social capital, barriers to production and capital shares: Implications for the importance of parameter heterogeneity from a nonstationary panel approach. Journal of Applied Econometrics 22, 429451.10.1002/jae.948
Pereira, J. and St. Aubyn, M. (2009) What level of education matters most for growth? Evidence from Portugal. Economics of Education Review 28, 6773.10.1016/j.econedurev.2007.12.001
Pesaran, M.H. (2004) General Diagnostic Tests for Cross Section Dependence in Panels. University of Cambridge, Faculty of Economics, Cambridge working papers in economics 0435.
Pesaran, M.H. (2006) Estimation and inference in large heterogeneous panels with a multifactor error structure. Econometrica 74, 9671012.10.1111/j.1468-0262.2006.00692.x
Pesaran, M.H. (2007) A simple panel unit root test in the presence of cross-section dependence. Journal of Applied Econometrics 22, 265312.10.1002/jae.951
Pesaran, M.H. and Smith, R. (1995) Estimating long-run relationships from dynamic heterogeneous panels. Journal of Econometrics 68, 79113.10.1016/0304-4076(94)01644-F
Petrakis, P. and Stamatakis, D. (2002) Growth and educational levels: A comparative analysis. Economics of Education Review 21, 513521.10.1016/S0272-7757(01)00050-4
Phillips, P.C.B. and Hansen, B.E. (1990) Statistical inference in instrumental variables regression with I(1) processes. Review of Economic Studies 57, 99125.10.2307/2297545
Pritchett, L. (2001) Where has all the education gone? World Bank Economic Review 15, 367391.10.1093/wber/15.3.367
Pritchett, L. and Summers, L.H. (1996) Wealthier is healthier. Journal of Human Resources 31, 841868.10.2307/146149
Psacharopoulos, G. (1994) Returns to investment in education: A global update. World Development 22, 13251343.10.1016/0305-750X(94)90007-8
Ranis, G., Stewart, F., and Ramirez, A. (2000) Economic growth and human development. World Development 28, 197219.10.1016/S0305-750X(99)00131-X
Sala-i-Martin, X. (1997) I just ran two million regressions. American Economic Review 87, 178183.
Self, A. and Grabowski, R. (2004) Does education at all levels cause growth? India, a case study. Economics of Education Review 23, 4755.10.1016/S0272-7757(03)00045-1
Sianesi, B. and Van Reenen, J. (2003) The returns to education: Macroeconomics. Journal of Economic Surveys 17, 157200.10.1111/1467-6419.00192
Stijns, J.C. (2006) Natural resource abundance and human capital accumulation. World Development 34, 10601083.10.1016/j.worlddev.2005.11.005
Swift, R. (2011) The relationship between health and GDP in OECD countries in the very long run. Health Economics 20, 306322.10.1002/hec.1590
Tamura, R. (1994) Fertility, human capital and the wealth of families. Economic Theory 4, 593603.10.1007/BF01213626
Tamura, R. (1996) From decay to growth: A demographic transition to economic growth. Journal of Economic Dynamic and Control 20, 12371261.10.1016/0165-1889(95)00898-5
Tamura, R. (2006) Human capital and economic development. Journal of Development Journal 79, 2672.
Tamura, R., Simon, C.J., and Murphy, K.M. (2016) Black and white fertility, differential baby booms: The value of equal education opportunity. Journal of Demographic Economics 82, 27109.10.1017/dem.2015.17
Tavares, J. and Wacziarg, R. (2001) How democracy affects growth? European Economic Review 45, 13411378.10.1016/S0014-2921(00)00093-3
Temple, J.R.W. (1999) The new growth evidence. Journal of Economic Literature 37, 112156.10.1257/jel.37.1.112
Temple, J.R.W. (2001) Generalizations that aren't? Evidence on education and growth. European Economic Review 45, 905918.10.1016/S0014-2921(01)00116-7
Weil, D.N. (2007) Accounting for the effects of health on economic growth. Quarterly Journal of Economics 122, 1265–306.10.1162/qjec.122.3.1265
Wolff, E.N. (2000) Human capital investment and economic growth: Exploring the cross-country evidence. Structural Change and Economic Dynamics 11, 433472.10.1016/S0954-349X(00)00030-8
Young, A. (2005) The gift of the dying: The tragedy of AIDS and the welfare of future African generations. Quarterly Journal of Economics 120, 423466.
Zhang, J., Zhang, J., and Lee, R. (2003) Rising longevity, education, savings, and growth. Journal of Development Economics 70, 83101.10.1016/S0304-3878(02)00088-3

Keywords

EDUCATION, HEALTH, AND ECONOMIC DEVELOPMENT

  • Dong-Hyeon Kim (a1), Yi-Chen Wu (a2) and Shu-Chin Lin (a3)

Metrics

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed