Rao, B. BhaskaraGounder, RukminiLoening, Josef L.2012-03-302012-03-302010Applied Economics00036846https://hdl.handle.net/10986/4860Mankiw et al. (1992) have extended the Solow (1956) model by augmenting the production function with human capital. Its empirical success is impressive and it showed a procedure to improve the explanatory power of the neoclassical growth model. This article suggests an empirical procedure to further extend the neoclassical growth model to distinguish between the growth and level effects of shift variables like the human capital. We use time-series data from Guatemala to show that while the growth effects of education are small, they are significant and dominate the level effects.ENEmploymentUnemploymentWagesIntergenerational Income DistributionAggregate Human Capital E240Human CapitalSkillsOccupational ChoiceLabor Productivity J240Economic Development: Human ResourcesHuman DevelopmentIncome DistributionMigration O150Measurement of Economic GrowthAggregate ProductivityCross-Country Output Convergence O470Journal ArticleWorld Bank