The Impact of Threshold and Nonlinear education on Total Factor Productivity in the Iranian Economy: Smooth Transition Regression Approach

The study of the effect of education on total factor productivity has been one of the important topics in the macroeconomic literature and educational policy that has been considered by many economists in recent years. However, recognizing the threshold of the effect of education on total factor productivity is a more important issue for educational policy makers. Therefore, the present study investigates the nonlinear relationship between education and total factor productivity during the period 1365-1397 SH[1](1986-2018). Average years of study have been used as an indicator of education. For this purpose, to determine the threshold of the impact of training on total factor productivity, the gentle transfer regression (STR) model has been used. The results of implementing the STR model while confirming the hypothesis of nonlinear effect of human capital of education type on total factor productivity showed that the quantity of education index in a two-diet structure with a threshold of 81.86 (equivalent to the average years of study 7.82 years) has a significant effect on total factor productivity. Given that the Iranian economy has exceeded the threshold since 1390 SH(2011) and increasing the quantity of education has a negative impact on productivity, so reviewing the quantitative development of education and giving priority to improving the quality of education has more priority than past.