Secondary versus higher education for growth: the case of three countries with different human capital’s structure and quality

The study estimates the impact of human capital on growth by focusing on three countries which differ in the human capital’s structure and quality: the Czech Republic, Estonia and Bulgaria. Human capital is measured by the labor force having completed at least upper secondary education. The co-integrating regressions based on the neoclassical production function are solved by the DOLS method with structural breaks. The results do not support the hypothesis that higher educational attainment per se accelerates aggregate output since the countries differ in both the sign and magnitude of the regression coefficients. However, the findings justify the view that the role of tertiary education increases with the level of economic development. One plausible explanation of this outcome is that the quality of human capital is more important for growth than its quantity. With regard to that, the paper provides evidence that in the European economies the foreign language learning used as a measure of the quality of schooling is more strongly linked to the increments of real GDP per capita than educational attainment. The impact of higher education might be explained also in light of the labor market channel, specifically the deepening qualification mismatch in countries with rising tertiary education graduation rates.