An Empirical Analysis of Higher Education and Economic Growth in West Virginia

Investment in education to increase economic growth, as one form of human development, has gained economists‟ and policy makers‟ interest. It establishes human capital that makes a substantial contribution to economic and income growth and preserves returns in the form of skilled labor which leads to increased development and improved quality of life. Different theories and models have used to examine the relationship between education and economic growth. Most of them paid attention to human capital accumulation as source of acceleration in economic growth. Some of them used human capital as an engine of economic growth to technological change. But for human accumulation, a country should invest more on education. Thus, the main objective of the study is to analyze higher education growth and economic growth in West Virginia. A set of simultaneous equations with three endogenous variables of per capita income change, education change and population change was used for the analysis. Results indicate that income growth and education growth are positively related while education growth reduces population growth in West Virginia.