The non-linearity in the relationship between human capital and growth

Abstract

This chapter empirically explores how institutions, human capital and gender interact and together influence growth. Our contribution is based on the threshold regression model by Hansen (Econometrica, 68, 575-603, 2000) in the version by Kourtellos et al. (2016), which allows for endogeneity in the threshold variable. Through all our regressions the dependent variable is per capita GDP growth, while human capital, disaggregated by gender, is the threshold variable. Results confirm the presence of non-linearities in the relationship between human capital and growth, while showing the importance that institutions and gender have on it. Findings also suggest that female education has a direct effect on GDP growth, while male education has an indirect effect, which is linked to institutional quality.