A study on human capital in solow models

Chin, Soon Wah (2008) A study on human capital in solow models. Universiti Malaysia Sabah. (Unpublished)


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Human capital has become more and more common when it comes to the discussion of the national economic growth. The government tends to increase the allocation to the education sector from year to year because they realized that this factor will lead us to strike the goal of out nation in the coming decade. Moreover, like education, health services can improve the quality of human resources, both now and in the future. Meanwhile, better health increases human potentialities and have an important influence on development of individual's abilities. This study is based on the Solow model which is easily can be extended to include total factor productivity (TFP) and human capital are represented by education and healthcare variable as determinant of economic performance. This production function is estimated using a regression model. The long run relationship between TFP, education, healthcare variables and gross domestic product (GDP), as well as the causal direction between each of them are examined. Several tests are conducted to support the regression model. There is no cointegrating relationship between the human capital and economic growth in a stationary time series. It shown that Islam (1995) finding, which is human capital, does not contribute significantly to explaining the economic development. It rather human capital significantly affects TFP which is positive correlated with the economic growth. Furthermore, the results also shown that the causality direction is from GDP to the human capital.

Item Type: Academic Exercise
Keyword: national economic growth, education, human capital, TFP, GDP
Subjects: H Social Sciences > HB Economic theory. Demography
Department: SCHOOL > School of Science and Technology
Date Deposited: 01 Apr 2014 08:55
Last Modified: 13 Oct 2017 09:45
URI: https://eprints.ums.edu.my/id/eprint/8625

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