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Title: Education and growth instrumental variables estimates
Authors: Cook, David E.
Keywords: Returns to education
Cross country panel data
Issue Date: 15-Sep-2002
Abstract: This paper estimates cross-country production functions with first differenced unbalanced panel data. Least squares estimates find significant social returns to education and experience, even after controlling for physical capital accumulation. The estimated returns to human capital are slightly smaller than private returns estimated from micro-level data. The estimated returns to physical capital accumulation are much larger than estimates based on factor shares. Physical and human capital are subject to measurement error and endogeneity. To address these problems, I estimate the production function with instrumental variables based on the age structure of the population. Instrumental variables estimates find statistically significant returns to physical and human capital that are quite similar to private returns.
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