The Effect of Human Capital as an Output of Education on Productivity - A Panel Data Analysis for Developing Countries

Oct 15, 2026

Productivity plays a central role in long-term economic growth and competitiveness, especially as scientific knowledge, technology, innovation, R&D, and entrepreneurship shape production in the 21st century. This study examines how human capital—an output of education—affects productivity in 24 developing countries, using PWT10.0 series for 1980–2019. Human Capital Index and Total Factor Productivity Index measure status, while Granger Panel Causality and Westerlund Panel Cointegration test short- and long-run links, revealing short-term bidirectional causality and long-term cointegration.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages25

Reading Time1 h 3 min

AccessFree to download

Abstract

Introduction

Productivity and its determinants

Human capital and productivity framework

The Effect of Human Capital as an Output of Education on Productivity: A Panel Data Analysis for Developing Countries Kadir SAİN1 Ministry of National Education Kurtuluş BOZKURT 2 Aydın Adnan Menderes University Abstract In the rapidly changing atmosphere of the global economy, productivity has become a very important concept for long-term economic growth, development, regional and global competitiveness, raising social living standards and increasing the level of welfare for countries. In the 21st century, when scientific knowledge, technology, innovation, R&D and entrepreneurship manifest themselves in every stage of the production process, human capital has come to the fore as an important and determining factor that increases productivity. In the current study, the effect of human capital, one of the most important outputs of education, on country productivity was analyzed for 24 developing countries, including Turkey, which are in the upper middle income group. In the application part, a panel data set was created for the 24 countries included in the study with the series obtained from the database of PWT10.0 for the period of 1980-2019. The Human Capital Index was used to reveal the human capital status of the countries included in the analysis and the Total Factor Productivity Index was used to reveal the productivity status. The Granger Panel Causality Test was employed to determine whether there is a short-term relationship and the Westerlund Panel Cointegration Test was employed to determine whether there is a long-term relationship between the two variables. As a result of a bilateral causality relationship was found between human capital and productivity in the short-term and acointegration relationship in the long-term. The study is important and different from other studies in that it focuses on the concepts of human capital and productivity, which have a very limited place in the education literature, although they are directly related to education, and it is grounded on an interdisciplinary approach (bringing together education, sociology and econometrics) . Keywords: Education, human capital, productivity, developing countries, panel data analysis DOI: 10.29329/epasr.2023 .631.1 Submitted: 06 November 2023 Accepted: 15 December 2023 Published: 30 December 2023 11Dr., Ministry of National Education, Ankara, Türkiye, ORCID: 0000-0002-6923-5268 Correspondence: [sainkadir33@gmail.com](sainkadir33@gmail.com) 2 Assoc. Prof, Söke Faculty of Business Administration, Aydın Adnan Menderes University, Aydın, Türkiye, ORCID: 0000- 0002-9098-9208, [Email: kurtulus.bozkurt@adu.edu.tr](Email: kurtulus.bozkurt@adu.edu.tr) Introduction In the face of rapid technological developments and changing global dynamics, education has become the driving force of social development, economic growth, global competitiveness, efficiency and productivity by making economic, social, cultural and political conditions suitable. Education acts as a catalyst for the formation of human capital that nurtures knowledge, skills and competencies that drive innovation, productivity and social well-being. Strong and robust educational institutions significantly affect and improve productivity through the human capital they create and by strengthening infrastructure capabilities, building strong institutional structures, especially in education and healthcare, generating new technologies, ensuring the uninterrupted continuity of research and development (R&D) activities, developing innovations, promoting the integration of entrepreneurship into society and its transformation into a culture, creating a working culture and style suitable for the business ecosystem, making production factors functional and enhancing management and leadership skills for firms, industries and economies. Productivity, in the broadest sense, refers to the difference between the inputs involved in the production process and the outputs generated

FAQs

What research question does the study address?

It analyzes the effect of human capital, as an output of education, on country productivity in developing countries.

How is human capital and productivity measured in the analysis?

Human Capital Index is used to assess human capital status, and Total Factor Productivity Index is used to assess productivity status.

Which statistical methods are used to test relationships between the variables?

The Granger Panel Causality Test checks for short-term relationships, and the Westerlund Panel Cointegration Test evaluates long-term relationships between human capital and productivity.

Oct 15, 2026

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