What Causes the difference of Human Capital across Countries?

Abstract

The goal of this empirical research is to investigate what is crucial to determine the difference of human capital across countries. An empirical analysis is made to examine whether and how much human capital formation is related with the various fiscal and social variables. Employed for the study are educational attainment data the average years of schooling across countries from 1965 to 1985-, government policy data such as public consumption & education expenditure, and social variables. It is shown that human capital formation is significantly influenced by policy variables such as the ratio of government consumption expenditure to GDP, and the ratio of government expenditure on education to GDP. It is also made clear how and to what extent social variables such as political instability, the degree of democracy-political right and civil liberties- and the mortality rate are significantly related with the difference of human capital formation across countries.