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α: calibrated so average coauthorship-adjusted count equals average raw count
We develop a theory of human capital investment to study the effects of school quality on student choices of education, and to understand its effect on economic growth. In a dynamic general equilibrium closed economy, primary education is mandatory but there is an opportunity to continue to secondary education and beyond. High-quality education increases the returns to schooling, and hence the incentives to accumulate human capital. This is caused by two different channels: higher quality makes education accessible to more people (extensive margin), and once individuals decide to participate in higher education, higher-quality increases the investment made per individual (intensive margin). Furthermore, educational quality determines human capital composition and growth. Cross-country data evidence shows that the proposed channels are quantitatively important and that the effect of the quality and quantity of education on growth depends on the stage of development.