Impact of human capital development on productivity growth in EU member states

    Alma Mačiulytė-Šniukienė Affiliation
    ; Kristina Matuzevičiūtė Affiliation


In this research, we investigate the impact of human capital on labour productivity in European Union member states using panel data analysis. Results of the paper are estimated using the Pooled ordinary least squares (OLS) and Fixed effects model (FEM). The results show that human capital is positively significant in improving the growth of labour productivity in the EU. Our estimates also suggest that the impact occurs after three times lags in case of education expenditure.

Keyword : human capital, productivity, health care expenditure, education expenditure

How to Cite
Mačiulytė-Šniukienė, A., & Matuzevičiūtė, K. (2018). Impact of human capital development on productivity growth in EU member states. Business, Management and Education, 16(1), 1-12.
May 30, 2018
Abstract Views
PDF Downloads
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.


Afrooz, A., Rahim, K. B. A., Noor, Z. B. M., & Chin, L. (2010). Human capital and labor productivity in food industries of Iran. International Journal of Economics and Finance, 2(4): 47-51.

Annabi, N. (2017). Investments in education: what are the productivity gains?. Journal of Policy Modeling, 39, 499-518.

Annabi, N., Harvey, S., & Lan, Y. (2011). Public expenditure on education, human capital and growth in Canada: an OLG model analysis. Journal of Policy Modeling, 33, 852-865.

Appleton, S., Hoddinoti, J., & MacKinnon, J. (1996). Education and health in sub-Sahara Africa. Journal of International Development, 8(13), 307-339.<307::AID-JID394>3.0.CO;2-D

Arshad, M. N., & Ab Malik, Z. (2015). Quality of human capital and labor productivity: a case of Malaysia. International Journal of Economics, Management and Accounting, 23(1), 37-55.

Asteriou, D. (2009). Foreign aid and economic growth: new evidence from a panel data approach for five South Asian countries. Journal of Policy Modeling, 31(1), 155-161.

Backman, M. (2014). Human capital in firms and regions: impact on firm productivity. Papers in Regional Science, 93(3), 557-575.

Bartel, A. P. (1995). Training, wage growth, and job performance: evidence from a company data-base. Journal of Labor Economics, 13(3), 401-425.

Becker, G. S. (2007). Health as human capital: synthesis and extensions. Oxford Economic Papers, 59(3), 379-410.

Belorgey, N., Lecat, R., & Maury, T. P. (2006). Determinants of productivity per employee: an empirical estimation using panel data. Economics Letters, 91(2), 153-157.

Benos, N., & Karagiannis, S. (2016). Do education quality and spillovers matter? Evidence on human capital and productivity in Greece. Economic Modelling, 54, 563-573.

Black, S. E., & Lynch, L. M. (1996). Human-capital investments and productivity. AEA Papers and Proceedings, 86(2), 263-267. Harvard University, Cambridge.

Bloom, D. E., Canning, D., & Sevilla, J. (2004). The effect of health on economic growth: a production function approach. World development, 32(1), 1-13.

Burger, R. P., & Teal, F. J. (2014). The effect of schooling on worker productivity: evidence from a South African Industry panel. CSAE Working Paper WPS/2014–10.

Chang, C. F., Wang, P., & Liu, J. T. (2016). Knowledge spillovers, human capital and productivity. Journal of Macroeconomics, 47, 214-232.

Chani, M. I. & Shahid, M. (2012). Human capital formation and economic development in Pakistan: an empirical analysis. Aktual’nі problemi ekonomіki, (6), 486-495.

Chansarn, S. (2010). Labor productivity growth, education, health and technological progress: a cross-country analysis. Economic Analysis and Policy, 40(2), 249-261.

de la Escosura, L. P., & Rosés, J. R. (2010). Human capital and economic growth in Spain, 1850–2000. Explorations in Economic History, 47(4), 520-532.

Delsen, L., & Schnewille, M. (1999). Human capital and labour productivity. Integration of Institutions and endogenous growth. Paper for the EALE conference in Regensburg.

Dillender, M. (2016). The potential effects of the affordable care act on disability insurance and workers’ compensation. The Economics of Health, 81-102.

Drucker, P. (1999). Knowledge – worker productivity: the biggest challenge. California Management Review, 41(2), 78-94.

Eneji, M. A., Dickson, V. J., & Onabe, B. J. (2013). Health care expenditure, health status and national productivity in Nigeria (1999–2012). Journal of Economics and International Finance, 5(7), 258-272.

Everitt, B. S., Landau, S., Leese, M., & Stahl, D. (2001). Cluster analysis (5th ed.). London: John Wiley & Sons.

Farzanegan, M. R. (2011). Education spendings and productivity in Iran: where have the education expen-diture gone? Selected Paper of Politics and Economic Development ERF 17th Annual Conference, Turkey.

Fleisher, B. M., Hu, Y., Li, H., & Kim, S. (2011). Economic transition, higher education and worker productivity in China. Journal of Development Economics, 94(1), 86-94.

Forbes, M., Barker, A., & Turner, S. A. (2010). The effects of education and health on wages and pro-ductivity. Productivity Commission Staff Working Paper 1-97.

Ganotakis, P. (2012). Founders’ human capital and the performance of UK new technology based firms. Small Business Economics, 39(2), 495-515.

Goldin, C. (2016). Human capital. In C. Diebolt & M. Haupert (Eds.), Handbook of cliometrics (pp. 55-86). Berlin, Heidelberg: Springer-Verlag.

Goos, M., Konings, J., & Vandeweyer, M. (2015). Employment growth in Europe: the roles of innovation, local job multipliers and institutions. Local Job Multipliers and Institutions. No. 15-10.

Gwartney, J. D., Holcombe, R. G., & Lawson, R. A. (2006). Institutions and the impact of investment on growth. Kyklos, 59(2), 255-273.

Hartwig, J. (2015). Structural change, aggregate demand and employment dynamics in the OECD, 1970–2010. Structural Change and Economic Dynamics, 34, 36-45.

Howitt, P. (2005). Health, human capital, and economic growth: a shumpeterian perspective. In G. Lopez-Cassasovas, B. Rivera, & L. Currais (Eds.), Health and economic growth. Findings and policy implications (pp. 19-40). The MIT Press, Cambridge, MA.

Hsiao, Ch. (2003). Analysis of panel data (2nd ed.). Cambridge: Cambridge university press.

Jajri, I., & Ismail, R. (2010). Impact of labour quality on labour productivity and economic growth. African Journal of Business Management, 4(4), 486.

Keswell, M., & Poswell, L. (2004). Returns to education in South Africa: a retrospective sensitivity analysis of the available evidence. The South African Journal of Economics, 72(4), 834-860.

Konishi, S., & Kitagawa, G. (2008). Information criteria and statistical modeling. Kyushu University: Springer.

Lopez-Casasnovas, G., Rivera, B., & Currais, L. (2005). Introduction: the role health plays in economic growth. In G. Lopez-Cassasovas, B. Rivera, & L. Currais (Eds.), Health and economic growth. Findings and policy implications (pp. 1-16). The MIT Press, Cambridge, MA.

McGuirk, H., Lenihan, H., & Hart, M. (2015). Measuring the impact of innovative human capital on small firms’ propensity to innovate. Research Policy, 44(4), 965-976.

Nielsen, H. S., & Westergard-Nielsen, N. (2001). Returns to schooling in LDCs: new evidence from Zambia. Centre for Labour Market and Social Research, Denmark.

Olimpia, N. (2012). Labour productivity and human capital in the EU countries: an empirical analysis. Retrieved from

Panopoulou, E., & Pantelidis, T. (2012). Convergence in per capita health expenditure and health out-comes in the OECD countries. Applied Economics, 44(30), 3909-3920.

Pocas, A. (2014). Human capital dimensions – education and health – and economic growth. Advances in Business-Related Scientific Research Journal (ABSRJ), 5(2), 111-120.

Polasek, W., & Schwarzbauer, W. (2011). Human capital and regional growth in Switzerland. Review of Economic Analysis, 3, 46-58.

Potelienė, S., & Tamašauskienė, Z. (2014). Žmogiškojo kapitalo konceptualizacija: raida, samprata ir formavimas. Verslo sistemos ir ekonomika, 4(1), 89-106.

Qadri, F. S., & Waheed, A. (2014). Human capital and economic growth: a macroeconomic model for Pakistan. Economic Modelling, 42, 66-76.

Qu, Y., & Cai, F. (2011). Understanding China’s workforce competitiveness: a macro analysis. Journal of Chinese Human Resources Management, 2(1), 8-22.

Razmi, M. J., Abbasian, E., & Mohammadi, S. (2012). Investigation the effect of government health expenditure on HDI in Iran. Journal of Knowledge Management, Economics and Information Technology, 5, 1-13.

Reino, H., Kiander, J., & Matti, V. (2006). Are government expenditures productive? Measuring the effect on privat sector production. Government Institute for Economic Research (VATT) Discussion Paper, Helsinki.

Rivera, B., & Currais, L. (2003). The effect of health investment on growth: a causality analysis. Interna-tional Advances in Economic Research, 9(4), 312-323.

Slaper, T. F., Hart, N. R., Hall, T. J., & Thompson, M. F. (2011). The index of innovation: a new tool for regional analysis. Economic Development Quarterly, 25(1), 36-53.

Teal, F. (2001). Education, incomes, poverty and inequality in Ghana in the 1990’s. University of Oxford.Tompa, E. (2002). The impact of health on productivity: empirical evidence and policy implications (pp. 181-202). The Review of Economic Performance and Social Progress.

Ucbasaran, D., Westhead, P., & Wright, M. (2008). Opportunity identification and pursuit: does an entrepreneur’s human capital matter?. Small Business Economics, 30(2), 153-173.

Umoru, D., & Yaqub, J. O. (2013). Labour productivity and health capital in Nigeria: the empirical evidence. International Journal of Humanities and Social Science, 3(4), 199-221.

Whaba, J. (2000). Returns to education and regional earnings differentials in Egypt. University of South Hampton.Whalley, J., & Xiliang, Z. (2013). The contribution of human capital to China’s economic growth. China Economic Policy Review, 2(1), 135-157.

Yunus, N. M., Said, R., & Hook, L. S. (2014). Do cost of training, education level and R&D investment matter towards influencing labour productivity?. Journal Economic of Malaysia, 48(1), 133-142.

Send mail to Author

Send Cancel