Economic freedom and human capital investment

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Abstract

Using data from 1972 to 2011 on 109 countries, this paper empirically studies the impact of economic freedom on human capital investment. Enrollment in secondary education is used as a proxy for such investments. Controlling for a large number of other determinants of education, it finds that, over the sample period, economic freedom had a substantial positive effect. This is probably because more economic freedom increases the return on investing in human capital, enables people to keep a larger share of the return, and, by facilitating the operation of credit markets, makes it easier for them to undertake such investments in the first place.
Original languageEnglish
Pages (from-to)421-445
Number of pages25
JournalJournal of Institutional Economics
Volume13
Issue number2
Early online date17 Oct 2016
DOIs
Publication statusPublished - Jun 2017

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