Delayed effects of graduate education on increased productivity

Summary

‘Human Capital Theory’ shows that education is a vital part of improving productivity. This paper investigates effects of tertiary education (post-school education: at universities, higher-education colleges, and similar institutions) on how productive an employee is. A problem with such research is to identify which variable is the cause, and which is the effect. This paper uses time-series regression analysis of World Bank data, on the fraction of a country’s workforce with tertiary education, and productivity. This paper also uses Britain as a case study: the British Household Panel Study shows what happens to a graduate in the years after they leave university. The delayed effects of education on output makes clear that education is a cause (rather than an effect) of improvements in productivity. In conclusion, university-level education is beneficial to economic growth.