Tam Vu, UH Hilo

Abstract

Using single equation estimations, Hojo (2003) finds that education increases productivity. Using simultaneous equation estimations for small open economies, Kumar (2003) shows that education fosters productivity growth, but this growth in turn has a negative effect on education. Both authors employ cross-sectional data. In this paper, we use panel data and simultaneous equation estimations for 65 countries worldwide. In contrast to Kumar, our results show that productivity has a positive effect on education instead of a negative effect. Also, education only has at best a weak effect on productivity in developed countries.