Sustainable Structural Change through Human Capital Quality: Evidence from EU–OECD Countries

Abstract

Sustainable development in advanced economies increasingly depends on the reallocation of resources toward knowledge-intensive sectors, a process defined as structural change. While human capital is extensively linked to economic growth, its role in structural transformation remains less explored. This study examines the relationship between education quality and health-related human capital and structural change in EU–OECD countries over 2000–2024. Education quality is proxied by average PISA scores, and life expectancy captures the health dimension. Using pooled OLS and dynamic fixed-effects models, the analysis accounts for persistence and country-specific heterogeneity. Results indicate that education quality supports structural upgrading in the pooled model, whereas life expectancy becomes significant in the dynamic specification. Investment consistently promotes structural transformation. Overall, the findings highlight the multidimensional contribution of human capital to structural change.