Effect Channels of Education Level and Cognitive Skill on Economic Growth

This paper aims to disclose the direct and indirect effect channels of education level and cognitive skill on economic growth. For this purpose, the effective education was introduced to analyse the provincial panel data in 1996 similar to 2012 against three levels of education in China: compulsory education, senior high school education and higher education. The education level and cognitive skill were treated as components of heterogeneous human capital. The empirical analysis shows that: On the compulsory education level, neither educated populated nor cognitive skill has any direct or indirect impact on economic growth. On the level of senior high school education, the education level has a significant positive effect on economic growth indirectly through innovation imitation. On the higher education level, the human capital exerts a greater positive effect on economic growth directly as a production input than that of compulsory and senior high school educations. The research findings shed new light on the improvement of economic growth through human capital accumulation at different education levels.