Education, Productivity and Economic Growth: A Selective Review of the Evidence

Abstract

We review a selection of the theoretical and empirical literature on human capital and growth that appear to provide the most relevant insights for policy development in the Canadian context. We first focus on the extension of the neo-classical growth model with the inclusion of human capital in an open economy framework, and discuss its empirical applications to the Canadian economy. We also examine other issues such as the returns to education and the distance from the technological frontier, the microeconomic versus macroeconomic return to education, and the quantity versus quality of education. Although the levels of investment in education and the overall quality of the educational system in Canada are fairly high, we argue that the returns of additional investments in post-secondary education could still be substantial since Canada is relatively close to the technology frontier.

Keywords

• human capital
• productivity
• economy
• education