Human capital and economic growth: Cross-country evidence from low-,middle- and high-income countries

Abstract

The study examines the relationship between human capital and economic growth by using a cross sectional sample of 106 countries to calculate an average over the period 2002–08. Sensitivity analysis on the core model found that the results are robust in terms of inclusion of relevant variables. However, the returns of human capital vary with countries having different income levels. The study found that the low-income countries can get higher returns than the other countries in case of investing in human capital. The study also tested the hypotheses of unconditional and conditional income convergence across nations. The results indicate that human capital either resists income divergence across nations or supports convergence.