The Impact of Education Expenditures on Growth in the EU28 – A Spatial Econometric Perspective

Lena Malesevic Perovic, Silvia Golem and Maja Mihaljević Kosor ()
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Maja Mihaljević Kosor: Faculty of Economics, Business and Tourism, University of Split, Croatia

Acta Oeconomica, 2018, vol. 68, issue 2, 271-294

Abstract: This paper analyses spatial impact of government expenditures on education on economic growth in the EU28 countries during the period 2004–2013. Employing a novel econometric technique that allows for the estimation of spatial spillovers, our results indicate that government expenditures on education significantly and positively influence GDP growth. Moreover, the indirect i.e. the spillover effects are quite large suggesting that the growth models should account for spatial interdependencies. Precisely, we find that education expenditures in one country affect GDP growth in the neighbouring countries, meaning that these spillovers are geographical in nature. Moreover, we find that the degree of interdependence among countries varies according to the average GDP per capita even if their geographical distances are identical. Additionally, immigration is found to be an important channel of spatial transmission.

Keywords: government spending on education; GDP growth; spatial panel analysis; spillover effects (search for similar items in EconPapers)
JEL-codes: C33 H1 H5 I2 O4 (search for similar items in EconPapers)
Date: 2018
Note: The authors thank Giovanni Millo for helpful advices, technical help and support in writing of this paper. This work has been fully supported by Croatian Science Foundation under the project No. UIP-2013-11-9558.
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