The Effect of Labor Quality on Economic Growth in Selected Countries

The necessity of taking human capital and investment into account for economic analyses is clear to a large extent according to the relevant literature. Majority of the studies in this area have exclusively concentrated on the role of education with positive effect on increasing the productivity of labor. However, labor’s experience and health constitute the main part of human capital in addition to education. This research aims at the analysis of the role of the quality of labor in connection with the effect of variables of labor’s education, experience and health on economic growth. In this research, total production function has been used on the basis of Mincer Wage Equation to study 75 countries classified on the basis of income between 1960-2000 in panel data method. In high income countries, the results show a significant and positive effect of the variables of labor’s education, experience and health (proxied by life expectancy) on economic growth. The result is the same in the middle income countries. In low income countries, only the variables of labor’s education and experience have been efficient on economic growth.