Measuring the Marginal Contribution of Education to Economic Growth

Abstract

One of the highlights in the economic literature of our decade is the establishment of a close link between advances in knowledge and growth in national income.' The otherwise unaccounted increases in output per person employed have been attributed, among other things, to the improved quality of the labor input. Productivity increases, technical change, and residuals cannot serve anymore as dei ex machina to explain the process of economic growth. One has to look behind these concepts and determine what has caused an increase in productivity, how technical change took place, or what variables could explain the residual.2 Although the residualism lost ground almost a decade ago, economists have not yet agreed on what is the proper way to measure the contribution of education to the growth of national income. Most of the empirical work in this area has been concerned with the contribution of education as a whole to increases in national income by means of one of the approaches which are available in the literature. The purpose of this essay is to suggest a methodology for assessing, as well, the