More Money in Education Makes Economy Best?

• Main Author: Rita Lima
• Format: Article
• Language: English
• Published: Czech Statistical Office 2013-12-01
• Series: Statistika: Statistics and Economy Journal
• Subjects: Human capital; expenditure on education; data envelope analysis; granger-causality test; VAR
• Online Access: https://www.czso.cz/documents/10180/23164307/180213q4063.pdf/f1364928-8ca4-466c-a2cf-fc4b9bc97a25?version=1.0
• ISSN: 1804-8765; 1804-8765

This paper investigates the relationship between government expenditure on education and labour force par­ticipation rate over the period 1970–2010 in Mediterranean economies of Europe area, usually refer to PIGS economies. The study employs a Data Envelope Analysis (DEA) to briefly describe some evidence on function­ing and dynamics of labour markets and to evaluate the efficiency of use of knowledge as strategy to increase the growth. The DEA results of PIGS are compared with DEA on three developed economies of Europe (UK, Netherlands and France). In addition, the paper uses a time series approach to investigate the long term rela­tionship between human capital and its employability applying the vector autoregressive (VAR) method and the Granger-Causality test. It has been found that the investment in education could be a prerequisite for sus­tainable growth and make it easier to achieve societal objectives, especially in the weakest growing countries.