This study investigates the impact of human capital on economic growth in Ethiopia overrnthe period 1971-2005 using an error-correction methodology. Contrary tornmicroeconomic studies. the macroeconomic evidence from this study shows that thernhuman capital variable in the form of schooling has an insignificant impact on the levelrnof output. Various analyses are provided in this respect. The deteriorating quality ofrneducation in the wake of significant expansion in the sector is an important element thatrnputs into question the basic framework that education provides students with growthrnenhancing skills. Schooling might not actually be creating the required skills or raisingrnworker's productivity. Besides. in the wake of a stagnant demand for labor. a rise in thernsupply of educated labor could only lead to a decline in the returns.rnThe study also questions the impacts of the economic policy directions and associatedrninstitutional settings. which could have been perverting the contribution to economicrngrowth that would have been made from an expansion in educational investment. The keyrneconomic policy implication that comes out of this result is that the provision ofrnschooling should be geared towards achieving broader socio economic goals withrnspecial emphasis on quality. Simply providing more schooling may yield little or nothingrnin the way of economic growth in the absence of other elements such as the appropriaternmarket and governmental institutions and suitable policy environment in the laborrnmarket and other sectors of the economy to support a functioning modern economy.rnSchooling by itself is not a sufficient engine of growth.