Portela, M., Alessie, R.J.M. and Teulings, C.N.

Measurement error in education and growth regressions.

The Scandinavian Journal of Economics

Vol. 112(3) pp. 618–639 (2010)

Abstract: The use of the perpetual inventory method for the construction of education data per country leads to systematic measurement error. This paper analyzes its effect on growth regressions. We suggest a methodology for correcting this error. The standard attenuation bias suggests that using these corrected data would lead to a higher coefficient. Our regressions reveal the opposite. We discuss why this is the case.

JEL Codes: I20, O40

Author links:

Publisher's Link: http://onlinelibrary.wiley.com/doi/10.1111/j.1467-9442.2010.01613.x/abstract