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This study examines a crucial assumption in much of the recent work on endogenous growth, namely, constant returns to scale in the production of human capital. A simple model is constructed to show that the returns to scale in human capital production can be inferred from the relationship between the wage rate and years of schooling. A large international micro dataset is used to estimate this relationship. The empirical evidence is decisive. There are decreasing returns to scale in human capital production; that is, the micro-level evidence is not supportive of endogenous growth driven by human capital accumulation.
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http://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/twerp555.pdf. (ISSP)
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Micro Evidence on Human Capital as the Engine of Growth
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(555), 30, 2000
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International Social Survey Programme (ISSP)
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2000
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