Nexus of Economic Growth and Levels of Education in Algeria: An Empirical Study Using the Principal Component Analysis (PCA)

The general objective of this paper is to assess the contribution of the different levels education for economic growth in Algeria during the period 1980-2022. To do this, we first rely on a so-called endogenous growth model: the Solow model “Augmented” by the human capital developed by Mankiw, Romer and Weil (1992). Then, we use the assessments of [5] which generate the average number of years of study of the economically active population for the different levels of education. And finally, we build from the Principal Component Analysis (PCA), an indicator composite of human capital to integrate aspects of our empirical model qualitative education alongside the quantitative proxy that is the average number of years of study indeed, our estimates reveal that only the level of primary education has an effect significant in addition, taking into account the quality of education improves our results and allows to assess at 24% the contribution of the primary level to Algerian economic growth.

JEL classification:E13; I21; O40

Keywords: Stock of education; PCA; Economic growth; Algeria