Education and GDP per capita

Average years of schooling and GDP per capita (2)
Figure 1

The graph above plots GDP per capita in 2014 in current USD (Data from the world bank) and average years of schooling per country from the Barro and Lee dataset. There is an interactive version of the graph here where you can select groups of countries. As the plot shows, income per capita of course increases as the average number of years spent in school increases.

The relationship seems to be quadratic (Figure 2), and GDP per capita takes off after 9-10 years of schooling. It is striking to see how certain countries cluster together. Unsurprisingly, Subsaharan Africa is both poor and its population is still less educated than elsewhere, with Botswana and South Africa standing out. Eastern European countries have educated populations but their GDP per capita is below the curve, meaning that the return on their education in terms of GDP per capita is low, still probably a vestige of their socialist past. There are a few countries that are way above the curve, meaning that their wealth is above what one would expect from their education level. Unsurprisingly, this includes oil states such as Saudi Arabia and the United Emirates. This also includes Portugal, which stands out among advanced economies (these categories come from Barro and Lee) because of its fairly high GDP in spite of low education levels.

Average years of schooling and GDP per capita (3)

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