ISSN 1471-0498
DEPARTMENT OF ECONOMICS
DISCUSSION PAPER SERIES
EDUCATIONAL HUMAN CAPITAL AND LEVELS OF INCOME:
EVIDENCE FROM STATES IN INDIA, 1965-92
Kamakshya Trivedi
Number 97
March 2002
Manor Road Building, Oxford OX1 3UQ
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MLITRAT FLITRAT MSEC FSECIMLR 1IFLR 0.958 1MSEC 0.829 0.82 1FSEC 0.9056 0.9579 0.909 1
Table 1: Correlation Matrix of Education Measures
(obs=476)
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2a 2b 2c 2d 2e 2f 2gmodel PMG PMG PMG PMG PMG PMG PMG
lagged (t-1) income φ ������� ������� ������� ������� ������� ������� �������
>������@ >������@ >������@ >������@ >������@ >������@ >������@
lagged(t-2) male high θ ������ ������ ������ ������
school enrollment >�����@ >�����@ >�����@ >�����@
lagged(t-2) female high θ ������ ������ ������
school enrollment >�����@ >�����@ >�����@
lagged (t-2) infant mortality rate θ ������� ������� ������� ������� �������
>������@ >������@ >������@ >������@ >������@
lagged(t-2) physical θ ������ ������ ������ ������ ������ ������
infrastructure >�����@ >�����@ >�����@ >�����@ >�����@ >�����@
lagged(t-2) [Male minus Female θ �������
high school enrollment] >������@
lagged(t-2) [Average of Male θ ������
and female enrollment] >������@
lagged(t-2) [3 lag years MA of θ �������
infant mortality rate] >������@
lagged(t-2) [3 lag years MA of θ ������
male high school enrollment] >�����@
lagged(t-2) [3 lag years MA of male θ �������
minus female high school enrollment] >������@
fixed effects µ <HV <HV <HV <HV <HV <HV <HV
number of observations NT ��� ��� ��� ��� ��� ��� ���
Maximised Log Likelihood ������ ������ ������ ������ ������ ������ ������
Standard error of Regression ����� ����� ����� ����� ����� ����� �����
LM bar test of non- ������ ������ ����� ����� ������ ����� ������
stationary residuals
No. of states for which Ho. Of � � � � � � �
normality of residuals rejected
F-test of No AR(1) residual ����� ����� ����� ����� ����� ����� �����
serial correlation
p-values reported for the F-test of No AR(1) serial correlation in residuals, Durbin (1970), Breusch, Godfrey (1978).
Table 2: Education & levels of Income: 15 States, 1965-92 Dependent Variable: Annual Growth Rate of Real State PerCapita Income
Notes: t-statistics are are reported in parentheses. Standard error of Regression is the simple average of consistent estimates of equation standard errors. The LM bar test of Non-stationary residuals is based on Im, Pesaran and Shin (1997). 5% critical values between 3.63 and 3.73.Residuals for each state were tested for Normality using the Shapiro-Wilk (1965) test.
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lagged (t-1) income φ ������� ������� ������� ������� ������� �������
>������@ >������@ >������@ >������@ >������@ >������@
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school enrollment >�����@ >�����@ >�����@
lagged (t-2) infant mortality θ ������ ������� ������ �������� ������� ������
rate >�����@ >������@ >�����@ >������@ >������@ >�����@
lagged(t-2) physical θ ������ ������ ������ ������ ������ ������
infrastructure >�����@ >�����@ >�����@ >�����@ >�����@ >�����@
lagged(t-2) [Ratio of Male to θ ������� ������� �������
female enrollment] >������@ >������@ >������@
lagged(t-2) government θ ������
development expenditure >�����@
lagged(t-2) real fixed capital θ �������
in factory sector >������@
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rate >������@ >�����@
lagged(t-2) female literacy θ ������
rate >������@
lagged(t-2) [Ratio of Male to θ �������
Female Literacy Rate] >������@
fixed effects µ <HV <HV <HV <HV <HV <HV
number of observations NT ��� ��� ��� ��� ��� ���
Maximised Log Likelihood ������ ������ ������� ������ ������ ������
Standard error of Regression ����� ����� ����� ����� ����� �����
LM bar test of non- ������ ������ ������ ������ ������ ������
stationary residuals
No. of states for which Ho. Of � � � � � �
normality of residuals rejected
F-test of No AR(1) residual ����� ����� ����� ����� ����� �����
serial correlation
Regressions in columns 3d to 3f omit the states Haryana & Assam, on account of missing values.
Table 3: Robustness & Alternative Measures: 15 States, 1965-92 Dependent Variable: Annual Growth Rate of Real State PerCapita Income
Notes: t-statistics are are reported in parentheses.
p-values reported for the F-test of No AR(1) serial correlation in residuals, Durbin (1970), Breusch, Godfrey (1978).
Standard error of Regression is the simple average of consistent estimates of equation standard errors.The LM bar test of non-stationary residuals is based on Im, Pesaran and Shin (1997). 5% critical values between 3.63 and 3.73 for columns 3a to 3f, and between 3.73 and 3.80 for columns 3d to 3f.Residuals for each state were tested for normality using the Shapiro-Wilk (1965) test.
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State Code
Andhra Pradesh 1Assam 2Bihar 3Gujarat 4Haryana 5Jammu & Kashmir 7Karnataka 8Kerala 9Madhya Pradesh 10Maharashtra 11Orissa 14Punjab 15Rajasthan 16Tamil Nadu 18Uttar Pradesh 20West Bengal 21
Table A-1: Sample of 16 States
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Plqlvwu| ri Vklsslqj dqg Wudqvsruw/ dqg �qdoo|/ Plqlvwu| ri Vxuidfh Wudqvsruw188 L dovr froohfwhg
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PEIPCAP PEIPGEN PEIPINDH PTIPSHWPEIPCAP 1PEIPGEN 0.9762 1PEIPINDH 0.8469 0.8591 1PTIPSHW 0.5695 0.5863 0.5379 1
Table A-2: Correlation Matrix of Physical Infrastructure Measures
(obs=521)
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suhihudeoh wr frqvwuxfw rqh frpsrvlwh lqgh{ ri sk|vlfdo lqiudvwuxfwxuh zklfk pljkw sur{| iru wkh ohyho
ri sk|vlfdo fdslwdo lq hdfk vwdwh1 Khqfh/ d sulqflsdo frpsrqhqwv phdvxuh ri sk|vlfdo lqiudvwuxfwxuh
lv frqvwuxfwhg e| frpelqlqj wkh irxu lqiudvwuxfwxuh yduldeohv18: Wdeoh D06 fdofxodwhv wkh sursruwlrq
ri yduldwlrq h{sodlqhg e| hdfk frpsxwhg sulqflsdo frpsrqhqw/ dqg lw lv fohdu wkdw wkh 4r| sulqflsdo
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59
Principal Eigenvalue Proportion CumulativeComponent
1 3.22056 0.8051 0.80512 0.56934 0.1423 0.94753 0.18678 0.0467 0.9942
4 0.02333 0.0058 1(obs=521)
Table A-3: Eigenvalues & Explained Variance
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D07/ lw lv wkh sulqflsdo frpsrqhqw zklfk fdq prvw hdvlo| eh lqwhusuhwhg dv d jhqhudo phdvxuh ri sk|vlfdo
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ru ohvv htxdo lq wkh �uvw sulqflsdo frpsrqhqw= wkh orzhvw zhljkw +3173, iru vwdwh kljkzd|v lv qrw wkdw
gl�huhqw wkdq wkh kljkhvw zhljkw +3187, iru hohfwulflw| jhqhudwlrq1
Principal 1 2 3 4ComponentVariablePEIPCAP 0.53506 -0.23763 -0.43193 0.68606PEIPGEN 0.53914 -0.21486 -0.36788 -0.72652
PEIPINDH 0.51035 -0.24652 0.82314 0.03482
PTIPSHW 0.40321 0.91466 0.02322 0.01696(obs=521)
Table A-4: Eigenvectors & Factor Loadings
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5:
Log Real Male Female Spliced Physical Per Capita High School High School Infant Infrastructure
Income Enrollment Enrollment Mortality (PrincipalRate Component)
Andhra Pradesh ����� ������ ������ ������� ������>�����@ >������@ >�����@ >������@ >�����@
Assam ����� ������ ������ ������� ������>�����@ >�����@ >�����@ >������@ >�����@
Bihar ����� ������ ������ ������� ������>�����@ >�����@ >�����@ >�������@ >�����@
Gujarat ����� ������ ������ ������� �����>�����@ >������@ >������@ >������@ >�����@
Haryana ����� ������ ������ ������ �����>�����@ >�����@ >������@ >������@ >�����@
Jammu & Kashmir ����� ������ ������ ������ ������>�����@ >�����@ >�����@ >������@ >�����@
Karnataka ����� ������ ������ ������ �����>�����@ >�����@ >������@ >������@ >�����@
Kerala ����� ������ ������ ������ �����>�����@ >������@ >������@ >������@ >�����@
Madhya Pradesh ����� ������ ������ ������� ������>�����@ >������@ >�����@ >������@ >�����@
Maharashtra ����� ������ ������ ������ �����>�����@ >������@ >������@ >������@ >�����@
Orissa ����� ������ ������ ������� ������>�����@ >������@ >������@ >������@ >�����@
Punjab ����� ������ ������ ������ �����>�����@ >�����@ >������@ >������@ >�����@
Rajasthan ����� ������ ������ ������� ������>�����@ >������@ >�����@ >������@ >�����@
Tamil Nadu ����� ������ ������ ������� �����>�����@ >������@ >������@ >������@ >�����@
Uttar Pradesh ����� ������ ������ ������� ������>�����@ >�����@ >�����@ >�������@ >�����@
West Bengal ����� ������ ������ ������� ������>�����@ >������@ >������@ >������@ >�����@
Total ����� ������ ������ ������� �����S.D. overall >�����@ >������@ >������@ >������@ >�����@S.D. between >�����@ >������@ >������@ >������@ >�����@S.D. within >�����@ >������@ >������@ >������@ >�����@
Table A-5: Summary of Main Variables (1965-1992)
Standard Deviations in parentheses.
5;
Variable Levels Differences
Log Per Capita 0.99 15.35Income
Male Secondary 2.23 9.44School Enrolment
Female Secondary 5.52 6.94School Enrolment
Infant Mortality 3.82 13.00Rate
Physical Infra- 1.39 13.00structure (PC)
Table A-6: Panel Data Unit Root Tests
Notes: 5% critical value based on Im, Pesaran & Shin (1997), table 3, between 3.63 and 3.73 (approx.)
Sample period is 1965-1992.Jammu & Kashmir is omitted from calculations.
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