The impact of human capital attainments on productivity growth: An Empirical Investigation

Abstract

Productivity is the backbone of the economy and the key to a sustained economic growth. The important role of human capital in productivity has been widely recognized since the seminal works of Schultz (1961), Becker (1964), Welch (1970) and Mincer (1974). Nelson and Phelps (1966) argued that highly-skilled workers are relatively more productive than low-skilled ones and expected to lead to higher productivity growth. Consequently, in an effort to enhance the education quality to boost the economic and productivity growth, many governments invest more in their driven- growth sectors including the education sector to yield productive workforce. On this ground, and through the application of Johansen Co-integration test and Error Correction Methodology (CI/ECM), this paper aims at investigating the role of human capital quality in productivity in Egypt over the period (1980- 2014). Results reveal that owing to the drag type of the education system and the over-education phenomenon besides the brain drain, the highly educated workers negatively impact labor productivity growth. Therefore, more efforts should be carried in order for the resulting output of the education system to be productive as thought to be.