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What role for human capital in the growth process: new evidence from endogenous latent factor panel quantile regressions
Author(s) -
Kostov Philip,
Le Gallo Julie
Publication year - 2018
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/sjpe.12196
Subject(s) - endogeneity , econometrics , economics , quantile regression , quantile , human capital , construct (python library) , panel data , computer science , economic growth , programming language
The estimates for the human capital effect in cross‐country growth regressions have been subject of considerable controversy. We argue that human capital is intrinsically a multidimensional construct. We construct human capital measure by combining available alternative proxies via confirmatory factor analysis. Using panel data endogenous quantile regression methods we analyse the whole conditional growth distribution by simultaneously accounting for the potential endogeneity of human capital and country‐specific effects. Our results conform to theoretical expectations and we are able to demonstrate the beneficial effect of both the measurement approach and the endogeneity correction on the derivation of theoretically consistent estimates.