How Does Education Affect Economic Growth
Given the widely accepted fact that education is one of the most important factors when talking about growth, the present session intends to provide further information about the topic.
According to Hanusheck and Wössmann (2010), education affects economic growth in three different ways. First, it is important to mention that it is responsible to increase human capital quality, a key factor considering the labor force. Once that economic sectors count with a high level human capital, they get able to increase labor productivity rate and also achieve a higher equilibrium level of output. Second, education can be seen as an innovative capacity hatcher, since it is sine qua non for the development of new technologies, products, and processes …show more content…
However, he focus on education impacts toward human capital and its influences on countries’ growth. In accordance with his study, investments on schooling at different levels have major effects on a country’s accumulation of human capital and growth. Barro also states that a labor force educated at the secondary and higher levels, in general, facilitates the development and the absorption of technologies from more advanced countries. This information deserves especial attention, due to the fact that the present study discusses about the relation between education and economic growth considering one of the most developed world countries, …show more content…
At the same time, it is important to mention that this increase of individual productivity is also a knowledge spillovers’ function, as will be described in the next paragraphs.
In accordance to Lucas (1988) knowledge spillovers are human capital externalities, given that they are result of benefits acquired by individually education. It is important to highlight, basing on Audretsch, Braunerhjelm and Carlsson (2005) that these knowledge spillovers originate from the sharing of information and knowledge absorbed by an individual worker. From this point of view, the shared knowledge affects in a positive way the productivity of other workers, once that it creates “learning opportunities” that leverage the general capacity to produce and, subsequently, the economic growth.
So, it was found that the effects of human capital externalities (spillovers) are adjusted by workforce’s educational level. As an empirical example, Moretti (2004) affirms that industries located in cities with high levels of human capital are able to produce a greater output with the same inputs than other similar plants located in cities with low levels of human
According to Hanusheck and Wössmann (2010), education affects economic growth in three different ways. First, it is important to mention that it is responsible to increase human capital quality, a key factor considering the labor force. Once that economic sectors count with a high level human capital, they get able to increase labor productivity rate and also achieve a higher equilibrium level of output. Second, education can be seen as an innovative capacity hatcher, since it is sine qua non for the development of new technologies, products, and processes …show more content…
However, he focus on education impacts toward human capital and its influences on countries’ growth. In accordance with his study, investments on schooling at different levels have major effects on a country’s accumulation of human capital and growth. Barro also states that a labor force educated at the secondary and higher levels, in general, facilitates the development and the absorption of technologies from more advanced countries. This information deserves especial attention, due to the fact that the present study discusses about the relation between education and economic growth considering one of the most developed world countries, …show more content…
At the same time, it is important to mention that this increase of individual productivity is also a knowledge spillovers’ function, as will be described in the next paragraphs.
In accordance to Lucas (1988) knowledge spillovers are human capital externalities, given that they are result of benefits acquired by individually education. It is important to highlight, basing on Audretsch, Braunerhjelm and Carlsson (2005) that these knowledge spillovers originate from the sharing of information and knowledge absorbed by an individual worker. From this point of view, the shared knowledge affects in a positive way the productivity of other workers, once that it creates “learning opportunities” that leverage the general capacity to produce and, subsequently, the economic growth.
So, it was found that the effects of human capital externalities (spillovers) are adjusted by workforce’s educational level. As an empirical example, Moretti (2004) affirms that industries located in cities with high levels of human capital are able to produce a greater output with the same inputs than other similar plants located in cities with low levels of human