Assessing the effect of education levels on economic growth in South Africa

Abstract

Education is generally considered to be the core source of individuals’ better life and countries' economic and social development. Consequently, attending university and getting high qualifications are perceived as tools that generate and enhance economic growth. The current study aimed to analyse the effect of various educational levels on South African economic growth. The study employed quarterly data from 1995Q1 to 2021Q4. The autoregressive distributed lag (ARDL) model was employed to assess both long-run and short-run relationships among variables. The long-run results revealed that people who completed their grade 12 (with matric certificate) and bachelor's degrees contribute positively to South African economic growth. However, honours and higher degrees (master's and PhD) were found to have an inverse relationship with economic growth in South Africa. On the other hand, the short-run relationship indicated that all education levels contribute to economic growth in the short term. Based on these findings, the author suggests that the South African higher education curriculum should be revised as the negative effect of high education towards economic growth should be resulting in growing unemployment and graduates waiting to be employed rather than creating jobs themselves. Additionally, increasing job creation for graduates with higher qualifications would reduce the number of graduates that leave the country looking for employment abroad.