This paper reconsiders the effects of volatile growth rates on growth itself. I show that the underlying endogeneity of government size can hide the net growth effects from volatility. There exists a positive direct and a negative indirect channel, with the latter operating through the size of...

Using firm-level data from 2006 to 2013 for a set of developing countries, we examine the effects of financial development on innovation. Financial development boosts innovation by improving resource allocation and investment toward strategic sectors as well as facilitating technology to promote...

This paper explains why different studies present widely-varying estimates of the effect of increased schooling on national income. It shows that when correctly-interpreted, these studies support the hypothesis that a one-year increase in average schooling attainment raises national income...

Students´ test scores at ages 9 to 15 are a measure of their skills as workers five to 55 years later. Using historic data on test scores and school attendance, I calculate the share of workers in 2005 that could have scored above 400 and above 600 in 45 countries. I find that the share above...

Using a new data set for human capital/adult, I show that changes in human capital cause economic growth in 56 countries over the 1985 to 2005 period. I show that these results are superior to results using average schooling attainment.

This paper presents evidence that students´ test scores at ages 9 to 15 are not a good proxy for a nation´s stock of human capital. Across countries test scores rise with increases in human capital up to $40,000/adult (2000$), but then decline as human capital increases up to $125,000/adult....

The marginal product of human capital in Mankiw, Romer, and Weil´s [1992] augmented Solow model measures the direct and two external effects of human capital created from schooling on national income. If this model is valid, its estimates of the share of this marginal product accruing to...

This article presents revised estimates of the external rates of return on investment in schooling provided in Schooling and National Income: How Large Are the Externalities?" The analysis is based on data for the same set of countries, but it incorporates methodological improvements that yield...

The economics literature identifies three effects of schooling on national income; the direct effect on the earnings of the workers who receive the schooling and the external effects on workers´ earnings and on physical capital due to schooling´s spillover effect on the productivity of these...

In 1960 Theodore Schultz expounded a human capital theory of economic growth that includes three elements: 1) Countries without much human capital cannot manage physical capital effectively, 2) Economic growth can only proceed if physical capital and human capital rise together, and 3) Human...