Problems of Measuring Knowledge Capital Stock and Its Contribution to Economic Growth

Review of the Book by E. Hanushek and L. Wössmann «The Knowledge Capital of Nations: Education and the Economics of Growth»

  • Aleksei Egorov HSE University
Keywords: knowledge capital, economic growth, educational achievements, educational policy


In their book, E. Hanushek and L. Wössmann analyze the relationship between the economic growth of countries and the stock of knowledge capital that they have. The main argument that is put forward and discussed in the book is that the level of knowledge capital is one of the key predictors of economic development. However, in order to test this hypothesis empirically, it is important to correctly measure the stock of knowledge capital. The authors propose their own methodology for measuring knowledge capital, which is based on the results of international studies of student performance. This methodology differs significantly from previous approaches, in which the stock of knowledge capital was approximated by the average years of schooling in the country. Measuring knowledge capital through aggregating the results of international studies of educational achievements, the authors suggest that the economic growth of countries is affected not by the duration of education, but by its effectiveness, that is, the average level of cognitive skills of people. The use of the knowledge capital indicator proposed by the authors in modeling economic development makes it possible to explain the differences in economic growth rates in different groups of countries, as well as to identify public policy instruments in the field of education, the use of which can accelerate economic growth.


Download data is not yet available.


Angrist J.D., Imbens G.W., Rubin D.B. (1996) Identification of Causal Effects Using Instrumental Variables. Journal of the American Statistical Association, vol. 91, no 434, pp. 444-455.

Arellano M., Bond S. (1991) Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. The Review of Economic Studies, vol. 58, no 2, pp. 277-297.

Arellano M., Bover O. (1995) Another Look at the Instrumental Variable Estimation of Error-Components Models. Journal of Econometrics, vol. 68, no 1, pp. 29-51.

Becker G.S. (1964) Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education. Chicago: University of Chicago.

Benhabib J., Spiegel M.M. (2005) Human Capital and Technology Diffusion. Handbook of Economic Growth (eds Ph. Aghion, S. Durlauf), Amsterdam: North Holland, vol. 1, pp 935-966.

Cunha F., Heckman J. (2007) The Technology of Skill Formation. NBER Working Paper no 12840.

Cunha F., Heckman J.J., Lochner L., Masterov D.V. (2006) Interpreting the Evidence on Life Cycle Skill Formation. Handbook of the Economics of Education (eds E.A. Hanushek, F.Welch), Amsterdam: North Holland, vol. 1, pp. 697-812.

Hanushek E.A. (2002) Publicly Provided Education. Handbook of Public Economics (eds A.J. Auerbach, M. Feldstein), Amsterdam: North Holland, vol. 4, pp. 2045-2141.

Hanushek E.A., Woessmann L. (2010) Education and Economic Growth. Economics of Education (eds D.J. Brewer, P.J. McEwan), Amsterdam: Elsevier, pp. 60-67.

Mankiw N.G., Romer D., Weil D.N. (1992) A Contribution to the Empirics of Economic Growth. The Quarterly Journal of Economics, vol. 107, no 2, pp. 407-437.

Mincer J. (1974) Schooling, Experience, and Earnings. New York: National Bureau of Economics Research.

Moretti E. (2004) Estimating the Social Return to Higher Education: Evidence from Longitudinal and Repeated Cross-Sectional Data. Journal of Econometrics, vol. 121, no 1-2, pp. 175-212.

North D.C. (1981) Structure and Change in Economic History. New York: Norton.

Solow R.M. (1999) Neoclassical Growth Theory. Handbook of Macroeconomics (eds J.B. Taylor, M. Woodford), Amsterdam: Elsevier, vol. 1, pp. 637-667.

How to Cite
Egorov, Aleksei. 2022. “Problems of Measuring Knowledge Capital Stock and Its Contribution to Economic Growth”. Voprosy Obrazovaniya / Educational Studies Moscow, no. 3 (October).
Book Review