Human capital and returns to scale

Models of endogenous economic growth typically assume that aggregate production is characterised by increasing returns to scale, often as a result of the accumulation of physical and human capital. In this paper, an international data‐set on formal educational attainments is used to disaggregate total employment in order to estimate a Cobb‐Douglas aggregate production function. The function is estimated, using a pooled cross‐section time‐series model, for a selection of high income OECD countries for five years in the period 1960‐85. The estimation results suggest that increasing returns to scale prevailed.