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Measurement Error in Education and Growth Regressions

The use of the perpetual inventory method for the construction of education data per country leads to systematic measurement error. This paper analyzes its effect on growth regressions. We suggest a methodology for correcting this error. The standard attenuation bias suggests that using these... Full description

1st Person: Portela, Miguel
Additional Persons: Alessie, Rob; Teulings, Coen
Source: in The Scandinavian Journal of Economics Vol. 112, No. 3 (2010), p. 618-639
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Type of Publication: Article
Language: English
Published: 2010
Online: Volltext
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520 |a The use of the perpetual inventory method for the construction of education data per country leads to systematic measurement error. This paper analyzes its effect on growth regressions. We suggest a methodology for correcting this error. The standard attenuation bias suggests that using these corrected data would lead to a higher coefficient. Our regressions reveal the opposite. We discuss why this is the case. 
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