Education expansion, credential inflation and sustainable economic outcomes: a study on four international alliances
Abdur Rahman Forhad, Gazi Mahabubul AlamPurpose
This study examines the relationship between educational expansion and economic performance. This study also assesses whether higher educational attainment correlates with higher earnings and productivity and compares these effects across developed and developing countries.
Design/methodology/approach
This study uses panel data from both developed and developing economies, employing descriptive analysis alongside pooled ordinary least squares (POLS) and fixed effects (FE) models. The empirical framework assesses the influence of educational attainment on earnings and broader economic indicators, accounting for country-specific heterogeneity.
Findings
Descriptive analysis shows that developing countries successfully implement their primary and secondary educational expansion despite modest economic progress. In contrast, developed countries have experienced economic progress, as reflected in greater educational achievement. The regression analysis further suggests that the impact of educational expansion on earnings and economic indicators remains limited in developing countries, while it is significant and larger in developed countries.
Practical implications
The findings indicate that credential inflation is present in developing countries and that rapid increases in educational attainment do not necessarily lead to the expected economic performance. In contrast, the impact of education on earnings is more pronounced in developed countries. The results further suggest that the returns to schooling are influenced by the quality of education, effective governance and innovation driven by research and development. Consequently, it is recommended that developing countries prioritize the provision of high-quality education.
Originality/value
This study contributes to the literature on educational expansion by examining whether increases in educational attainment yield proportional economic returns. The comparative analysis further indicates that in the absence of quality education and institutional support, a mere expansion of education and its attainment does not guarantee improved economic performance.