The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
No country has achieved sustained economic development without investment in education. Thus, education policy can play a vital role in facilitating development. But which types of schooling-secondary or tertiary-should public policy promote? This paper develops an analytical framework to address this question. It shows how the composition of human capital stock determines a country's development. Hence, promoting the "wrong" type of schooling can have little effect on development. In addition to identifying some characteristics of an optimal education policy, the paper helps in understanding why empirical studies have failed to find a significant relationship between schooling and growth.