The Impact of Different Levels of Education on Economic Growth in Iran

According to the empirical studies, the effect of different levels of education on economic growth is not identical in various countries. The objective of this research was to examine the effects of different levels of education on economic growth in Iran. This study is an applied research and the estimation of the model is done using VAR and VECM approach. The statistical population is Iran and the sample is the quarterly data during the period 1996-2007. The Augmented-Dickey-Fuller (ADF) and Phillips and Perron (PP) unit root tests were used to verify the stationary of the variables which indicate that the variables are I(0) or I(1). The analyses were done using Johansen and Juselius and Granger causality tests. According to the results, in the long-run, higher education, lower secondary and primary levels had the strongest effect respectively on the growth of GNP in Iran. The workers with upper secondary and pre-university education levels did not have significant effect on economic growth in the long-run. In the short-run and long-run, there is a unidirectional causal effect from all education levels except upper secondary and pre-university to economic growth and the economic growth does not Granger cause education levels. Overall, the results showed that, in the long-run, development of educational opportunities at higher, lower secondary and primary levels will respectively have the strongest impact on economic growth, indicating growth enhancing role of higher education in Iran. The economic growth will also increase with literacy rate.