In this paper, we study whether public and private expenditure in health and education affects economic growth via their influence on people's health, skills and knowledge. We consider a growth accounting framework in order to test whether countries which devote a larger amount of resources to the consumption of health and educational services experience higher growth rates; we also test whether the effects on economic growth of public expenditure in health and education differ from those of private expenditure. Our empirical analysis is based on a panel of 19 OECD countries observed between 1971 and 1998. The results are consistent with the hypothesis that health and education expenditure positively affects growth; the estimated impact is stronger for health than for education. More importantly, we find some evidence that public expenditure influences GDP growth more than private expenditure. This suggests the possible role of Welfare State policies in solving credit constraints problems at the individual level, stemming from investments in human capital formation.