ENDOGENOUS GROWTH, THE SOLOW MODEL AND HUMAN-CAPITAL

Both endogenous growth theory and the (augmented) Solow model propose a role for human capital in the growth process though each is based on different conceptual arguments. Since both approaches can justify the inclusion of human capital levels and growth rates in an output growt h regression the two theories cannot readily be distinguished empirica lly. This paper argues that the variable most commonly used in empiric al studies to proxy human capital (levels or growth) - school enrolmen t rates (SERs) - may capture both stock and accumulation effects, but changes in SERs can provide useful additional dynamic information on t he contribution of human capital to growth. Empirical evidence from sa mples of developed and less developed countries during 1960-85 suggest s important growth effects associated both with 'initial' levels of, a nd changes in, SERs. The nature of these effects appears to differ bet ween the two country groups.