Education and economic growth Some cross-sectional evidence from Brazil

Capital, labor, human capital and technical progress are the four principal sources of growth of aggregate real output. Based on data from individual Brazilian states in 1970 and 1980, an aggregate meta-production function relating aggregate real output of each state to capital, labor, average education and time is estimated. It is found that one additional year of average education per person of the labor force increases real output by approximately 20 percent. However, there is also evidence that this large measured effect of average education may be due to the existence of a threshold effect in average education at between three and four years. Of the four sources of growth, technical progress, or equivalently total factor productivity, is the most important, accounting for approximately 40 percent of the growth in Brazilian output in the 1970s; followed by human capital, accounting for approximately 25 percent. Physical capital and labor together account for the remainder.