Human capital and economic growth in OECD countries: some new insights

Abstract

Purpose

The new growth literature in general is very optimistic about the positive impact that human capital has on the economic growth of countries. Based on this argument, the current paper focusses to investigate the impact of different types of human capital on economic growth.

Design/methodology/approach

The paper utilizes data for the period 1998 to 2017 and employs suitable econometric techniques.

Findings

It is found that it is not the stock of human capital rather its utilization in terms of average working hours that matters for higher growth. Other than human capital, trade openness and investment are positively associated with growth. On the other hand, inflation has an insignificant impact while employment level has a negative impact on growth. Moreover, for developing countries, the study also revealed that stock of human capital has negatively and average working hours has positively impacted economic growth. Finally, domestic investment and employment level appeared to be the main growth determinants in developing countries.

Research limitations/implications

Policymakers are suggested to ensure the maximum utilization of working hours, trade openness and domestic investment in improving economic growth in OECD countries.

Originality/value

This study has visualized the impact of human capital on economic growth from a new perspective and hence would be useful for policymakers.

Citation

Tahir, M., Hayat, A., Rashid, K., Afridi, M.A. and Tariq, Y.B. (2020), "Human capital and economic growth in OECD countries: some new insights", Journal of Economic and Administrative Sciences, Vol. 36 No. 4, pp. 367-380. https://doi.org/10.1108/JEAS-07-2019-0073