Education and economic growth: endogenous growth theory test ; the French case

Abstract

The debate concerning the various determinants of economic growth has attracted considerable attention, due to both the importance of its implication in terms of economic policy and the number of theoretical and empiri cal analyses engendered by it. Thus, the argument according to which endogenous growth models explain long-term economic growth is often put forward. Particularly, it is held that the production of knowledge by education induces self-sustained economic growth. However, in spite of nu merous theoretical developments, attempts at empirical verification give contradictory conclusions. The aims of this article are therefore to undertake a critical reading of the theoretical contribution of new growth theories and to pre sent an empirical testing for France in the 19th and 20th cen turies to justify or invalidate the probable endogenous na ture of economic growth induced by education. In short, it is an empirical test of Lucas' model (1988). The results are surprising and so in contradiction with the hypothesis of new growth theories: human capital returns are decreasing and thus knowledge produced by education cannot be the engine of self-maintained economic growth.