Persistence of human capital development in OECD countries over 150 years: Evidence from linear and nonlinear fractional integration methods

Abstract

The goal of this study is to examine the persistence of human capital development in 21 member countries of the Organization for Economic Cooperation and Development for the period 1870–2019. Gross enrollment rates for secondary and tertiary education are both used as proxies for human capital development. Employing linear and nonlinear fractional integration approaches, our results suggest high degrees of persistence in the series under examination. However, lower orders of integration are observed in the data for tertiary education than for secondary education. Thus, no evidence of reversion to the mean is found in secondary education, and Australia and New Zealand have the highest coefficients for the time trends and the highest dependence. However, mean reversion in tertiary education is found in France, the US, and, in particular, Austria. Finally, evidence of nonlinearity is observed in about eight countries, though without altering the persistence in the series. The implications of the empirical results are also presented.