Measuring the Effects of Human Capital on Growth in the Case of Romania

Abstract

It is obvious that human capital is critical for economic growth. The exploration of the impact of human capital on growth could bring valuable information for policy makers to substantiate their development strategies and to stimulate factors leading to economic growth. The paper aims to investigate the relationships between human capital and economic growth in the romanian economy by analyzing the correlations between statistical variables measuring human capital and economic growth. Using a regression model, it is analyzed the impact of the educational and health capital on the economic output. In the paper, a linear regression model of the relation of human capital to economic growth is subjet of an empirical analysis, firstly, taking into consideration only education as human capital and secondly, incorporating in the model the both components: health and education. A strong correlation between educational variables and GDP, for 1990-2010, was found. The quality of the educational capital has a determinant role in the economic growth, the highly educated people are influencing more the economic output than the secondary educated ones. GDP per capita is negatively correlated with the number of worked hours and positively influenced by the life expectancy. The most important contribution contained by this article refers to the incorporation of the two components of human capital in the same econometric model explaining the economic growth. The added value of paper consists in offering suggestions and orientation for national educational policies.