GOVERNANCE RETURNS TO EDUCATION: DO EXPECTED YEARS OF SCHOOLING PREDICT QUALITY OF GOVERNANCE?

Abstract

This paper examines the relationship between expected years of schooling and governance in a sample of 157 countries. Previous studies have looked at similar relationships, specifically between education and democracy, and although researchers have theorized a relationship between governance and education, little empirical work has been undertaken. This study examines the relationship between the Human Development Report variable "Expected Years of Schooling" and six Worldwide Governance Indicators, which measure quality of governance internationally. To avoid endogeneity and omitted variable bias, this study holds constant variables potentially related to governance and controls for country and year fixed effects. The results of this research suggest that expected years of schooling does not predict most governance indicators, but does predicts Government Effectiveness, which measures the overall quality of government programs. An important exception to this finding is in Sub-Saharan Africa, where expected years of schooling significantly and substantively predict Government Effectiveness as well as Regulatory Quality. This demonstrates that education may be more important to good governance in Sub-Saharan Africa, a finding with implications for international development policy. Efforts aimed at encouraging good governance in Sub-Saharan Africa should focus both on governance itself, as well as national capacity building.