My senior thesis in economics aims to build on existing studies of human capital and returns to education with a focus on innovation-fueling, STEM-based education, to answer: How does STEM education as an enhanced form of human capital affect macroeconomic growth across different countries? A review of literature reveals that many studies account for human capital in growth equations, measured as average years of education. This is because increasingly in recent years, economists and governments around the world have come to regard movement toward a knowledge-based economy as key to economic progress. Important for this study, it is the social return at the macro level that provides the relevant economic justification for the public support of education. However, educational attainment as a measure of human capital leaves out the additional impact of research, technological know-how and innovation on growth. It is important to note that human capital relates to both labor quality and technology/innovation. Considering this, this paper seeks to bridge some of the overlap between education and innovation as it affects productivity by focusing on education in STEM—fields that produce workers able to meet the growing science- and technology-based innovation that lies at the core of modern economic growth.
The empirical framework for this study is derived from the traditional neoclassical growth model and is augmented to include an enhanced form of labor. This variable is measured as a specific type or quality of human capital, which is STEM educational attainment. The results of this study are intended to help identify those policy measures most likely to enhance growth through an investment in science-, technology-, engineering- and math-based education. The factor constraining data availability is international reports of STEM education. From the National Science Foundation (2014), STEM data are presented in various, but limited, sets. This study uses reports of first university STEM degrees. One data set covers 87 countries at various stages of economic development for 2010 or most recent period. A second set covers 15 countries over the 2000-2010 period. Drawing on both cross-sectional and panel data sets, as well as on data on existing physical capital, human capital and level of development, estimates can be obtained using regression analysis, which thus far indicate significant, positive effects of STEM education on productivity across specifications.