Effects of Education on Productivity and Growth

The objective of this first part is to report on works examining the effects of education on productivity. From the outset, the analysis of the economic role of education followed two parallel paths, that of microeconomics with the theory of human capital) and that of macroeconomics (with international empirical work on Economic Growth). 

Both types of approaches rely on the use of statistical techniques to determine how an increase in educational attainment affects individual income or growth at the macroeconomic level. This helps them to prepare better for all of these exams.

Returns to Education

The wage return to education can then be estimated from these effects on perceived wages. The point of reference for the extensive literature on returns to education is the Mincer Equation. The analysis of the relationship between training and salary consists of relating the salary to three groups of variables: variables describing initial training, variables describing experience (and seniority), and finally a third, heterogeneous group, intended to take into account other factors influencing the salary (individual characteristics: sex, profession…; Characteristics of the Company: branch of activity, size, profit…).

As the emphasis is on the first two groups of factors – training and experience – the third, when present, is only there to arrive at “pure” estimates of the effects of training and education. ‘experience. The return to an additional year of study is thus measured by its effect on the salary. Empirical estimates of the return to education range from 5% to 15%, depending on the era and country.

Macroeconomic Approach Effects of Growth Somewhat 

Beginning in the 1960s, macroeconomists analyzed the contribution of education to aggregate economic growth. The aim was to quantify the proportion of the production growth that can be directly attributed to the increase in the level of training. The first series of international studies showed that education had the expected positive effect, the rise in the level of training explaining on average one-fifth of the increase in production by workers (Temple 2001).

The second series of studies, using more sophisticated econometric techniques, however, produced contradictory results, which even led some researchers to explicitly question the relationship between education and growth (Pritchett 1999). Recent studies that mobilize improved data sets show that investment in education does have a substantial impact on productivity growth.

Education Heart of Innovation Phenomena

Beyond the problems of estimating the effects of education on growth, recent macroeconomic developments have made it possible to renew reflection and better specify the role of education and the mechanisms through which it could have an impact. productive value. Thus, certain models resulting from the theories of endogenous growth no longer consider education as a factor of production, but as a factor of innovation. Other models emphasize that education increases productivity less than the capacity of individuals to adapt to changes in the economic tuition environment (Benhabib & Spiegel 1994).

This work provides a certain number of elements of understanding both empirical – the evolution of the rates of return to education – and theoretical – the role of education in the diffusion of technological innovations. However, several questions remain unanswered.

New Technologies Skills Development

  • Isn’t the evolution of the return on investment observed in recent years attributable to the emergence of an information society? Doesn’t the rise in returns to education and training come from the diffusion of new information technologies which would increase labour productivity? 
  • Even if it is still difficult today to assess the effects of NICTs on the total productivity of factors, there is nevertheless little doubt that a new technological wave is now affecting the production processes of the whole of the world economy. How do these technological changes affect the nature of work and employment, how do they alter the skills required and, accordingly?


Nick Non-Neutral Technological Change

Over a long period, researchers observed an increase in demand for human capital. However, this phenomenon has accelerated markedly. Author & al. (1998) show that the relative demand for skilled labour has increased more rapidly over the last twenty-five years (1970-1996) than during the previous thirty (1940-1970). Companies have replaced the least skilled workers with a skilled workforce at an unprecedented rate. The increase is even more marked in the years 1980-1990.

This is mainly due to technological developments, and in particular to information technologies, which require a more qualified workforce. Such developments concern the United States but they appear in most developed countries. Krueger’s study (1993), often cited as a reference on these questions, shows that employees, with equal characteristics, who use computers in their work activity have higher wages by 10 to 15% higher than those who do not.

Moreover, he shows that the expansion of these computer tools can be attributed to between one-third and one-half of the increase in rates of return to education in the 1980s. Numerous studies have subsequently confirmed the importance of IT on the demand for skilled labour in the 1990s (Green & al. 2000).

Computer or Pen

The direct causal relationship between the use of information technology and wage increases has, however, been discussed, notably by Dinar do & Pischke (1997). In response to Krueger’s analysis, these authors resort to much more comprehensive data on the type of tools used by German workers in their work activity. The results suggest that employees who use computers have unobserved skills that are valued in the labour market but that may not have much to do with computer skills.

Labour sociologists, relying on detailed case studies, have shown for some time now that new modes of an organization have important consequences on the qualification of employees (De Coster & Pichault 1994). These organizational changes lead to an expansion of the tasks of operators and an accentuation of the collective nature of the work linked to the imprecision of individual work (managing hazards, solving problems, etc).

Read More: Computer Keyboard Tricks Must Use in Windows PC

One thought on “Effects of Education on Productivity and Growth

Leave a Reply

Your email address will not be published. Required fields are marked *

GK Digital Festive Media Hookah Care Relation Status Ganesh Kulariya NatureQue