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Comparison of the Impact of Education on Economic Growth in Subregions of Europe
Vérosta, Denis ; Chytilová, Helena (advisor) ; Babin, Jan (referee)
This thesis examines the impact of investments in human capital via additional years of schooling on economic growth. The main aim is to verify the hypothesis about expected positive impact of additional year of schooling on economic growth in subregions of Europe and that the impact will be bigger in subregions of Northern and Western Europe. Human capital theory and economic theory of growth are introduced as well as theoretical model of economic growth that developed by author to analyse the impact. In order to investigate the theory on a data, an econometric model is introduced. The model assumes that the real GDP per worker depends on the stock of physical capital per worker and average years of schooling of worker. Data set that is used for the estimation consists of observations for 34 countries from 1955 to 2010 in 5 years intervals. Using OLS and TSLS estimation methods, 10 regressions are then run with two of them for the entire dataset and two of them being run for each subregion apart, for the purpose of comparison. The results of regression for the entire dataset confirm the expected positive impact of additional years of schooling in Europe region, the finding also agrees with the previous empirical literature (Bassanini and Scarpetta 2001, Soto 2009, Barro and Lee 2013) as well as with the theory of human capital and economic growth. In addition to this, the results of regressions that were run for subregions apart suggest that this impact is heavily related to the quality of education, which tends to be better in Northern and Western Europe, where the impact of additional years of schooling was confirmed separately as well. These findings correspond with the previous empirical literature of economic growth of Soto (2009) and Hanushek and Woessmann (2012), where the quality of education turned out to be crucial as well.
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