Education quality and the empirics of economic growth: reconciling Mankiw-Romer-Weil estimates with microeconometric evidence

We extend Mankiw, Romer and Weil's classic paper by introducing differences in education quality (proxied by students' performance on the PISA test). This substantially reduces the role of human capital investment rates in explaining cross-country income differences. More importantly, the coefficient on this variable is now consistent with microeconometric evidence on returns to education.