The effects of formal educations’ levels on regional economic growth in Greece over the period 1995–2012

Abstract

This study empirically investigates the relationship among the levels of formal education and regional economic growth in Greece, over the period 1995–2012. It uses a panel data set, which includes 13 regions. The proxy of human capital is the proportion of the employees that has received primary, secondary and higher education. Also, the study estimates the effect of the level of education on economic growth in low and high-income Greek regions, separately. The empirical analysis reveals that in the long-run considering all regions, secondary and higher education have had a positive effect on regional GDP, while primary education has had a negative effect. Regarding the two subgroups of regions, the results show that in low-income regions, secondary education has more significant effect than higher education, while in high-income regions higher education contributes more to GDP, than secondary education. The results also suggest that there is evidence of bidirectional long-run Granger causality between all levels of education and GDP. The findings indicate that education, especially at secondary and higher levels, has increased regional prosperity.