Austria 2025 – The Effect of Educational Advance on Long-term Economic Growth

High-quality labour input boosts the innovative power of an economy as well as improves their ability to use technological innovations from abroad. The paper is a first in assessing a qualification adjusted labour input for Austria by combining the volume of work, measured in hours, with educational information. A simple growth accounting approach shows that including quality enhancing effects in the labour input triples or even quadruples the contribution to growth made by the input factor labour. This provides an explanation for the part of economic growth which has previously been assigned to the residual term known as "total factor productivity".