Explaining the Negative Coefficient Associated with Human Capital in Augmented Solow Growth Regressions

Jean-Louis Arcand and Béatrice d'Hombres

Macroeconomics from University Library of Munich, Germany

Abstract: In this paper we consider different explanations for why the coefficient associated with human capital is often negative in growth regressions once country-specific effects are controlled for, whereas the coefficient in question is strongly positive in cross-sectional or panel results based on the pooling estimator. In turn, we explore: (i) additional sources of unobserved heterogeneity stemming from country- specific rates of labor-augmenting technological change, (ii) measurement error in the human capital series being used, and (iii) the lack of variability in the human capital series once the usual covariance transformations are implemented. Remaining unobserved country-specific heterogeneity and measurement error alone are shown to be inadequate explanations. The lack of variability in the human capital series is tackled using a modified version of the Hausman-Taylor (1981) approach whose identifying assumptions are found to be reasonable in the context of the Solow model.

Keywords: Economic growth; human capital; measurement error; panel estimation (search for similar items in EconPapers)
JEL-codes: E13 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2005-10-11
New Economics Papers: this item is included in nep-mac
Note: Type of Document - pdf; pages: 32
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/mac/papers/0510/0510010.pdf (application/pdf)

Related works:
Working Paper: Explaining the Negative Coefficient Associated with Human Capital in Augmented Solow Growth Regressions (2002)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:0510010

Access Statistics for this paper

More papers in Macroeconomics from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ().