In Mankiw, Romer, and Weil's augmented Solow model [Quarterly Journal of Economics 107 (2) 407–437 (1992)], the marginal product of human capital accrues to three factors of production: directly to human capital, and as an external effect to physical capital and labor. This paper estimates national stocks of human capital in 1990 created from prior investment in schooling and shows that for 36 countries the (macro) marginal product of human capital accruing to workers in 1990 is consistent with estimates of the (micro) marginal return on investment in schooling in workers' earnings studies. This reconciliation provides empirical evidence for the augmented Solow model.
Address correspondence to: Theodore R. Breton, Calle 32 # 77A-20, Medellin, Colombia; e-mail: [email protected].
Thanks to George Psacharopoulos and Asa Janney for assistance and to Steven Davis, Andrew Breton, Charlie Mann, Walter McMahon, and numerous anonymous referees for helpful comments on earlier versions of this paper.