The role of human assets in economic growth: theory and empirics

Diallo, Ibrahima Amadou (2017): The role of human assets in economic growth: theory and empirics.

Abstract

In this paper, we introduce a new variable called Human Assets and study its effects on economic growth both theoretically and empirically. The first part builds an endogenous growth model which demonstrates that Human Assets increase economic growth. The second part employs the new Dynamic Common Correlated Effects Estimator for heterogeneous cross-sectionally dependent dynamic panels to empirically study the impact of Human Assets on economic growth. The results corroborate the theoretical predictions that Human Assets act positively on economic growth. The positive impact of Human Assets on growth is maintained when we use small sample bias corrections and sensitivity to the choice of lag orders. The paper also illustrates, theoretically and empirically, that the magnitude of the effect of Human Assets on growth is huge compared to most other determinants of economic growth. Finally, we discover that human capital does not affect the growth rate once we control for Human Assets.

• Item Type: MPRA Paper
• Language: English
• Keywords: Dynamic Common Correlated Effects Estimator; Heterogeneous Panels; Dynamic Optimization; Endogenous Growth Theory; Human Assets; Undernourishment; Under five mortality; Adult literacy; Secondary Enrolment
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61 - Optimization Techniques ; Programming Models ; Dynamic Analysis; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C63 - Computational Techniques ; Simulation Modeling; I - Health, Education, and Welfare > I1 - Health > I15 - Health and Economic Development; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I25 - Education and Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O50 - General

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