Analyzing the relationship between human capital and economic growth: An empirical analysis on Turkey

The current century is a period in which technology is developing rapidly and professions, job descriptions, qualifications and skills are constantly changing. There is always competition and race among countries. Economic growth and development lie at the heart of being the pioneers and leaders of this competition and change. Economic growth and development, along with R&D investments, production of intellectual industrial property rights, technological progress, natural resources and capital stock, undoubtedly depend on the effectiveness of investments in human capital. In order to examine the contribution of human capital to the Turkish economy, this study uses quarterly data on GDP, educational attainment of the employed, fixed capital formation, human development index and human capital index for the period 2000:1-2019:4. The cointegration relationship of the data is analyzed with the Gregory-Hansen cointegration test with structural breaks and the coefficients are interpreted according to the results of the FMOLS. According to the results of the study, the findings support the human capital theory. The increase in the level of education of the employed increases economic growth in general. The increase in the employment of primary school graduates has a positive effect on GDP, but decreases GDP after the break periods. Although the effect of employment of general high school graduates is more limited, it supports economic growth. Employment of vocational high school graduates yielded different results in the models. It is observed that the increase in the employment of university graduates has a positive effect, but leads to decline in GDP in some break periods. Economic growth is positively correlated with fixed capital formation and human capital index, but the effect of the change in the human development index is not significant, whereas it increases GDP after the break period.