Education, health, and economic development

This paper examines the relationships of income with education and health using heterogeneous panel cointegration techniques to account for the potential cross-country heterogeneity in the effects of education and health. Our main results are: (i) education and health are, on average, income-enhancing; (ii) for different schooling levels, although primary education lowers income, both secondary and tertiary education raise income with larger impacts for the former than the latter, on average; (iii) there is considerable heterogeneity in the effects of education and health on income across countries; and (iv) the effect of education (health) on income tends to be greater (smaller) in countries with higher levels of development, greater (less) trade openness, less abundant natural resources, less corruption, higher levels of democracy, and a more homogeneous society.