I- Introduction

II- Data on the age structure of human capital

III- Empirical specification and main results

IV- Robustness analysis

V- Conclusion

References

Abstract

This paper shows that the age structure of human capital is a relevant characteristic to take into account when analysing the role of human capital in economic growth. The effect of an increase in the education of the population aged 40–۴۹ years is found to be an order of magnitude larger than an increase in the education attained by any other age cohort. The results are unlikely to be driven by the age structure of the population, as we find that the effects on growth of the age structure of education and the age structure of population are distinct. The findings are robust across specifications and remain unchanged when we control for long-delayed effects in human capital or for the experience of the workforce.

Introduction

Human capital has been considered one of the fundamental determinants of the differences in growth rates observed between different countries (e.g. Lucas, 1988). A common approach in the empirical literature has been to proxy the human capital of the working age population using the average years of schooling of the population aged 15 years and over or 25 years and over. These measurements, however, include the years of schooling of the retired section of the population, and mask whether the effect of education on growth varies across age groups. The goal of this paper is to break down total years of schooling into its different components in order to analyse whether its effect on growth depends on the age structure of human capital. The results of the paper suggest that this is in fact the case. We estimate a growth accounting model that incorporates human capital both as a regular factor in the production function (e.g. Lucas, 1988; Mankiw, Romer andWeil, 1992) and as a promoter of productivity through the facilitation of innovation and the adoption of new technologies (e.g. Nelson and Phelps, 1966; Romer, 1990). In the econometric specification, the first channel is captured by the increments in the years of schooling and the second by the initial level of education. In this model, we evaluate the effect of the age structure of human capital on economic growth, measured by the ratio of the average years of schooling of a given age group to the average years of schooling of the working age population. The results show that whereas the education of the youngest generations relative to that of the labour force does not have a clear effect on the growth rates, the education of the middle-aged section of the population has the largest impact, with positive but decreasing effects in older age groups. The largest estimates are found for the human capital of the population aged 40–۴۹ years.