Economic growth channels from human capital: A dynamic panel analysis for Brazil

Abstract

The purpose of this paper is to test the effect of human capital on Brazilian economic growth through the factor accumulation channel and the total factor productivity channel. We used new human capital measures, covering the period from 1996 to 2015 and employed the two-step SYS-GMM method, with standard finite sample error correction and principal components analysis for the control of the proliferation of instruments. The results show that human capital affects economic growth through both individually tested channels. Also, both basic and advanced human capital have a positive impact on growth through the total factor productivity channel.