The effects of public education expenditures for different levels of education on economic growth: The case of Turkey

In the economic literature, the relationship between education expenditures and economic growth is clearly demonstrated by endogenous growth models. Improvement in the quality of labor, which is one of the factors of production, and the increase in the knowledge, skills and abilities of individuals lead to an increase in productivity in the economy, thereby generating more output. In this study, the timeliness and validity of the relationship between these two variables are examined for the Turkish economy by using different indicators and the Autoregressive Distributed Lag (ARDL) model. Extended Dickey Fuller (ADF) (1979,1981) and Phillips-Perron (PP) (1988) unit root tests are used to determine the stationarity of the series. For this purpose, the study estimates multiple models using two different data frequencies. First, with the help of quarterly data for the period 2006:2-2023:3, the effect of education expenditures for pre-primary and primary education, secondary education and higher education on gross domestic product is analyzed. Then, with the help of annual data, the effect of schooling rates at these three different levels of education on the change in GDP per worker is investigated for the period 1994-2022. Different control variables are also used for the annual and quarterly models. The findings obtained from the quarterly data of the study show that education expenditures on higher education positively affect GDP. On the other hand, education expenditures on pre-primary and secondary education, which are the other education levels, affect GDP negatively. The findings obtained using annual data reveal that the enrollment rates at three different levels positively affect GDP per worker in the long run, but the increase in GDP per worker is the highest due to the secondary education variable, followed by the enrollment rate in pre-primary and primary education, and the least amount of enrollment rate in higher education increases GDP per worker.