Education, educational policy and growth

Storesletten, Kjetil and Zilibotti, Fabrizio (2000) Education, educational policy and growth. Swedish Economic Policy Review, 7, (1), 39-70.


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This paper reviews the recent theoretical and empirical literature
that relates education to growth, and draws some lessons for the
Swedish experience. First, the “human capital accumulation” approach is discussed: agents decide, at each moment of their lives, to
forego time or resources to improve their future productivity. The
quality of the educational system is argued to be a crucial determinant
of the decision to invest in human capital and of the growth rate of
the economy. Hence, qualified teachers and appropriate incentive
schemes within the schooling sectors are important for the long-run
performance of the economy. Next, the trade-off between basic innovation
(promoted by a restricted subset of economic activities) and
learning-by-doing (which occurs at a more diffuse level in the economy)
is analysed. It is argued that the former can be fostered by investments
in “elite” research institutions, while the latter depends on
the average educational attainment of the working population. Finally,
the relationship between education, growth and inequality is discussed.
The second part of the paper analyses recent trends in educational
attainments in Sweden. Data show that enrolment rates in tertiary
education in Sweden have lagged behind the major industrialised
countries during the 1980s. Quantitatively, however, this is unlikely to
be a major explanation of the productivity slowdown experienced by
Sweden after 1970. But it is emphasised that (i) low educational premiums
may harm incentives for people to invest in human capital;
and (ii) low relative wages and low-power incentive schemes for
teachers may cause a deterioration in the quality of education with
negative effects on long-run growth.

Item Type: Article
Related URLs:
Subjects: H Social Sciences > HB Economic Theory
L Education > L Education (General)
Divisions : University Structure - Pre August 2011 > School of Social Sciences > Economics
ePrint ID: 33081
Accepted Date and Publication Date:
Date Deposited: 17 Jul 2006
Last Modified: 27 Mar 2014 18:20

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