Evaluating the Impacts of Human Capital Stocks and Accumulation on Economic Growth: Some New Evidence†

"Various hypotheses have been put forward in recent years concerning the contribution of human capital to economic growth. This paper argues that school enrolment rates--by far the most commonly used human capital measure in growth regressions attempting to test these hypotheses--conflate human capital stock and accumulation effects and lead to misinterpretations of the role of labour force growth. An alternative education-related human capital measure is constructed which is capable of distinguishing between stocks and flows. Applying this measure to samples of developed and less developed countries during the 1960-85 period suggests not only that there are important growth effects associated both with 'initial' stocks of, and subsequent growth in, human capital, but also that this new measure out-performs the simple school enrolment rates used in previous analyses."