How does government expenditure on education and specific reforms in education affect economic growth? Evidence from OECD countries and policy implications.

Details

Supervisors

Fabio Mariani

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [120] en sciences économiques, orientation générale

Abstract

Education is one of the vehicles driving economic growth and individual development, and it definitely pushes toward inequality reduction. Government expenditure on education plays a crucial role for economic growth, in fact, an increase in expenditure on education generates accumulation of human capital, which allows people to be more productive and have increasing returns, thereby a higher real GDP per capita. This paper aims at investigating if expenditure on education has effect on economic growth though econometric regression analysis. We use data from World Bank and Barro-Lee dataset for the 36 OECD countries and India. I have found India as worth of investigation due to its recent development and improvements in the education system. We also scrutinize how the government allocate the expenditure into the different levels (primary, secondary, and tertiary) of education and which one has effect on economic growth. Our panel is divided into developed and developing countries, and we have found that the initial development of a country matters for its subsequent growth (Solow convergence). Our findings differ between the short run (annual) and the long run (five-year period) economic growth, with a larger effect in the long run. However, from our analysis, emerges that government expenditure on education has effect overall on economic growth, but the impact is mainly negative.