Human Capital Threshold Effects in Economic Development : A Panel Data Approach With Endogenous Threshold

We investigate for human capital threshold effects on economic growth dealing with the issue of endogeneity of the threshold variable. We consider two measures of human capital: (i) the education level and (ii) an extended measure of it accounting for the health level. We provide clear-cut evidence of significant human capital threshold effects on economic growth distinguished between low and high levels, which supports the club convergence hypothesis within different levels of human capital. For the higher human capital regime, we find positive and strong relationship, while for the lower the relationship is negative mainly due to poor health conditions