The Nexus between Schooling and Growth: International Evidence since 1870

The growth effects of schooling are often assumed to be exaggerated because of feedback effects from growth to schooling. This paper investigates the nexus between productivity growth and schooling at different levels using a sample of 19 OECD countries over the period 1870 to 2006. The empirical estimates show 1) that schooling is independent of expected growth and most other variables that are associated with the present value of schooling; 2) a one-way causality from schooling to growth; and 3) that the growth effects of schooling are increased rather than reduced when schooling is instrumented.