Student enrolment and output effects in Poland: 2SLS and VAR estimates

Abstract

Objective: The purpose of this article is to investigate the direct effects of student enrolment on industrial production and GDP while controlling other growth determinants such as physical capital investments and employment. Research Design & Methods: Educational effects on output, i.e. industrial production and gross domestic product (GDP), are estimated by means of Two-Stage Least Squares (2SLS) model, vector error-correction autoregression (VAR/VEC) model, and with the application of annual data sample for the period of 1992-2017. Findings: The study proves that there is a significant correlation between the number of students and output in Poland, especially with respect to the industrial sector. Regardless of estimators used, higher output is related to a decline in student enrolment in a long period of time. Investments in physical capital are an important factor responsible for both higher output and stronger student enrolment. Employment appears to influence neither GDP growth nor student enrolment. However, employment negatively impacts changes in industrial production. Implications & Recommendations: In the presence of an inverse correlation between economic growth and the number of students, the author argues in favour of discreet government policies aimed at boosting student enrolment in alignment with the pattern of investment activities. Contribution & Value Added: The article contributes to a better understanding of two-way causation between student enrolment and economic growth in Poland, with clear guidelines for educational policies aimed at a better match with demand for high-skilled labour in industry.