WHY DOES SCHOOLING GENERATE ECONOMIC-GROWTH

This paper examines the relationship between schooling and GNP growth found in cross-country growth regressions. Using a standard decompositional technique, I divide education's effect on economic growth into three parts: (1) an effect from the change in the returns to schooling over time; (2) an indirect effect coming from schooling's positive effect on schooling growth; and (3) a direct effect coming from education's raising income growth even holding education growth constant. The lion's share of the schooling-GDP growth connection comes from the schooling-schooling growth connection.