Novo Working Paper - New Evidence on the Role of Cognitive Skill in Economic Development

New Evidence on the Role of Cognitive Skill in Economic Development

Eduardo de Carvalho Andrade (Insper Institute of Education and Research)
Márcio Laurini (IBMEC Business School)
Abstract

This paper presents new evidence on the role of cognitive skills in promoting economic growth rate. The novelties in this paper are that we use a within country dataset (Brazilian state and municipality levels data) and a new methodology, a nonparametric kernel regression estimation with mixed data. The main findings are the following: (i) there is strong evidence that the cognitive skill explains growth, but its relationship with growth appears to be non-linear, (ii) the quantity of schooling remains significant even after controlling for the quality of schooling, and (iii) there is support to the hypothesis that the effect of the cognitive skill on growth is important in an open environment.