Higher education and economic development : can public funding restrain the returns from tertiary education?

Abstract

This paper examines whether the contribution of tertiary education toeconomic growth and income per capita depends on the structure of publiceducation budgets. The analysis resorts to a panel of 41 countries over theperiod 1970-2010. The empirical approach is based on system GMMregressions and Hierarchical Linear Models, which allow dealing withendogeneity concerns and parameter heterogeneity. The estimates show thatbudget imbalances against basic schooling seem to undermine theachievement of productivity gains from higher education.