Nonlinear Study of Educational Effects on Iran's Economic Growth: Approach of Smooth Transition Regression

In the new models of economic growth, the role of human capital has been emphasized as one of the pillars for growth and development. Generally, increasing the level of education and training costs will lead to an increase in human capital that will ultimately show itself in economic growth. The main objective of the research is to examine the two factors of educational level and educational expenditures on economic growth. In this framework, the Terasvirta test showed that the growth pattern follows a non-linear logistic function of two regimes. Research findings show that GDP in both regimes has a positive and significant elasticity with respect to their changes, although in the second regimen (compared to the first regimen) their values have decreased. In addition, contrary to expectations, education and educational expenditures have a negative impact on economic growth in both regimes rather than having a positive effect on economic growth.