Education, Knowledge Capital, and Economic Growth

This article reviews the role of education in promoting economic growth, with a particular focus on the role of knowledge capital, or the aggregate skills of a country. It concludes that there is strong evidence that the cognitive skills of the population – rather than mere school attainment – are powerfully related to long-run economic growth. The relationship between knowledge capital and growth proves extremely robust in empirical applications. The effect of skills is complementary to the quality of economic institutions. Growth simulations reveal that the long-run rewards to educational quality are large but also require patience.