Understanding the links between economic growth and aggregate human development outcomes can help inform efforts to monitor and forecast progress in improving those outcomes, such as in assessing progress toward the Millennium Development Goals.
This research project aimed to develop a set of tools for consistently aggregating the empirical, microeconomic relationships to throw light on the macroeconomics of human development. It developed and implemented a micro-econometric decomposition method for investigating the proximate determinants of aggregate human development outcomes and to measure the importance of growth in mean incomes relative to changes in the distribution of income and non-income characteristics of the population.
The project applied these methods to basic schooling over the 1990s in Morocco and Vietnam—countries chosen because of their particularities in growth and human development performance in the 1990s and because of the availability of suitable survey data. The study used the Morocco Living Standards Surveys of 1990–91 and 1998–99 and the Vietnam Living Standards Surveys of 1992–93 and 1997–98. A user friendly STATA program was written to implement the method in other settings.
The analysis found that growth and distributional change have played a surprisingly modest role in the changes in school enrollments over time observed in both countries. The bulk of the changes observed over time were accountable to changes in the structure of the model linking these variables to schooling attainments. The decomposition could not reveal what drives these structural changes because they are economy-wide factors; but there must be a strong presumption that they include both the effects of public policy efforts at increasing enrollments and increases in the overall economic returns to schooling, and/or more widely shared knowledge about those returns.
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