A study of the Use of Human Capital in Economic Development with Emphasis on the Roles of Health, Instruction Inequality & Education Distribution

 

Volume 2, Issue 2, Number 7, Pages 115-127, Published Online April 20, 2014

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Author(s):

Akbar Pilehvar , Farshad Shokri

ABSTRACT:

This paper discusses how Today the role of Productivity is crucial in providing suitable conditions for economic growth and development, While productivity growth can be rooted in the quality and quantity of manpower across the country (Iran) in the period 1965-2012 ; In this paper, we seek to define indicators of human capital (health and education inequality as the quantity and quality indicators of human capital) and its impact on the per capita income in Iran. In this study, At First, we used the bounds testing approach (Bounds testing) to analyze the long-run relationships in addition to new test for analyzing the static variables. Then, we seek to estimate the equations using autoregressive distributed lag (ARDL) and Erroe correction method (ECM). The results indicate that there was a significant and positive relationship between the variables of health, labor productivity and percentage of productive capacity with the per capita income in the short & long terms. Finally, we concluded that the impact of distributed education on per capita income and economic growth is negative respectively. Namely, Improving per capita income and economic growth requires the education dispersion to be reduced. In other words, Emphasis should be given to the elementary and secondary schools rather than higher education. At the end, the structural stability and diagnostic tests (CUSUMSQ & CUSUM) show that the estimated model and coefficients are stable during the period.

KEYWORDS:

Labor productivity, Human capital, Education Gini coefficient, ARDL Method, Bounds Test.

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