Short- and Long-Run Effects of Education on Economic Growth: A Panel Error Correction Analysis

This study analyzes the effects of education on economic growth in different countries grouped by income level. The key variables are cointegrated and integrated of order one. Hence, we employ the panel error correction model (PECM) to estimate the short-run and the long-run relationships. Results show differences in the impact of education across income levels. Primary education has been shown to be beneficial in the short and long run. Surprisingly, tertiary education had a negative effect on economic growth for all except the low-income group. Granger causality also suggests the direction of causation is that of education on economic growth and not vice versa.