Human capital and regional economic growth - Evidence from the dual approach

Theoretical contributions to the literature have stressed the role of human capital in promoting economic growth. However, the empirical exercises have provided mixed evidence on the real effect of such type of capital. Most of the evidence has been obtained by estimating growth equations or production functions using samples of (heterogeneous) countries. In this paper, we report empirical evidence on the effects of human capital in the sample of Spanish regions. As they are supposed to be more homogeneous economies from an institutional, social and economic perspective, we assume that the evidence provide in this paper is a more robust measure of the real effects of human capital in stimulating the take off of lagging economies. We departure from the traditional empirical approach as our estimates come from the dual framework. This easily allows us to get not only the aggregate return to human capital, but also some other important measures such as its shadow price, that is the willingness to pay for an extra year of education of firm’s employees, and the degree of complementariety/substitutability with other types of capital. Results suggest that human capital has exerted a significant effect in the Spanish regions, which is stronger in the less developed ones. It not only have a direct effect but an indirect one by compensating the mechanism of decreasing returns to physical capital. Important conclusions for the assessment and design of regional development policies can be derived from such results.

The regional distribution of unemployment: What do micro-data tell us?

Regional disparities in unemployment rates are large and persistent. The literature provides evidence of their magnitude and evolution, as well as evidence of the role of certain economic, demographic and environmental factors in explaining the gap between regions of low and high unemployment. Most of these studies, however, adopt an aggregate approach and so do not account for the individual characteristics of the unemployed and employed in each region. This paper, by drawing on micro-data from the Spanish wave of the Labour Force Survey, seeks to remedy this shortcoming by analysing regional differentials in unemployment rates. An appropriate decomposition of the regional gap in the average probability of being unemployed enables us to distinguish between the contribution of differences in the regional distribution of individual characteristics from that attributable to a different impact of these characteristics on the probability of unemployment. Our results suggest that the well-documented disparities in regional unemployment are not just the result of regional heterogeneity in the distribution of individual characteristics. Non-negligible differences in the probability of unemployment remain after controlling for this type of heterogeneity, as a result of differences across regions in the impact of the observed characteristics. Among the factors considered in our analysis, regional differences in the endowment and impact of an individual's education are shown to play a major role

Human Capital and Regional Wage Gaps.

This paper uses micro-level data to analyse the effect of human capital on regional wage differentials. The results for the set of Spanish regions confirm that they differ in the endowment of human capital, but also that the return that individuals obtain from it varies sharply across regions. Regional heterogeneity in returns is especially intense in the case of education, particularly when considering its effect on the employability of individuals. These differences in endowment and, especially, in returns to human capital, account for a significant proportion of regional wage gaps.Education, Experience, Regional disparities, Returns to human capital, Wage gap decomposition.

Human capital and regional wage gaps

This paper uses micro-level data to analyse the effect of human capital on regional wage differentials. The results for the set of Spanish regions confirm that they differ in the endowment of human capital, but also that the return that individuals obtain from it varies sharply across regions. Regional heterogeneity in returns is especially intense in the case of education, particularly when considering its effect on the employability of individuals. These differences in endowment and, especially, in returns to human capital, account for a significant proportion of regional wage gaps.En este artículo utilizamos datos a nivel micro para analizar el efecto del capital humano en las diferencias salariales por regiones. Los resultados para el grupo de las regiones españolas confirman que existen diferencias en cuanto a la dotación de capital humano, pero también varían en gran medida los beneficios que las personas obtienen a partir de este capital en las diferentes regiones. La heterogeneidad regional de los beneficios es especialmente aguda en el caso de la educación, en concreto cuando se considera qué efecto tiene para la capacidad de inserción laboral de las personas. Estas diferencias en las dotaciones y, especialmente, en los beneficios del capital humano representan un porcentaje significativo de las diferencias salariales por regiones

"The regional distribution of unemployment. What do micro-data tell us?"

Regional disparities in unemployment rates are large and persistent. The literature provides evidence of their magnitude and evolution, as well as evidence of the role of certain economic, demographic and environmental factors in explaining the gap between regions of low and high unemployment. Most of these studies, however, adopt an aggregate approach and so do not account for the individual characteristics of the unemployed and employed in each region. This paper, by drawing on micro-data from the Spanish wave of the Labour Force Survey, seeks to remedy this shortcoming by analysing regional differentials in unemployment rates. An appropriate decomposition of the regional gap in the average probability of being unemployed enables us to distinguish between the contribution of differences in the regional distribution of individual characteristics from that attributable to a different impact of these characteristics on the probability of unemployment. Our results suggest that the well-documented disparities in regional unemployment are not just the result of regional heterogeneity in the distribution of individual characteristics. Non-negligible differences in the probability of unemployment remain after controlling for this type of heterogeneity, as a result of differences across regions in the impact of the observed characteristics. Among the factors considered in our analysis, regional differences in the endowment and impact of an individual’s education are shown to play a major role.Regional labour markets, Regional unemployment, Education, Gap decomposition for non-linear models. JEL classification:C25, J64, J70, R23

Does Regional Growth Affect Public Attitudes Towards the European Union?

This study analyses the impact of growth (in absolute and relative terms) of the European regions on the attitudes towards the European Union (EU) of their citizens. It does so in a period of socio-economic turbulence caused by the financial and sovereign debt crises, the accession to the Union of countries of Central and Eastern Europe, and the spread of anti-European rhetoric. In a first stage, regional indicators of support for and trust in the EU are calculated from the microdata of several Eurobarometer surveys. They confirm interesting changes in the regional distribution of citizens’ attitudes during the period analysed, which vary between the two indicators. In a second stage, these indicators are merged with data on regional growth to assess the impact of the latter on citizens’ perception of the EU. The results suggest that support for and trust in the EU are more widespread in regions with a dynamic economy. This positive impact of growth remains significant and sizeable after controlling for several economic characteristics of the region. However, the impact of regional growth on attitudes towards the EU is not the same in all regions. The effect of support and trust is more intense in regions with per capita income above the EU average

On the impact of European Union Cohesion Policy on regional support for the European project

Cohesion Policy is the main policy tool of the European Union and the backbone of its regional policy. Given its characteristics, it is the EU policy with the greatest impact on the daily life of European citizens and can compensate population groups and places less favoured by the European integration process. As a result, the implementation of Cohesion Policy in a region is expected to shape the degree of regional support for the process of European integration. This study tests this assumption using regional data for the EU28 in a period that includes the recent phases of expansion and recession, in a scenario characterized by growing anti-EU rhetoric. The results suggest that a greater amount of EU funds spent in the region does not stimulate regional support for the Union. However, an appropriate temporal distribution of the resources allocated to the region could have a positive effect on support

The Spatial Distribution of Human Capital: Can It Really Be Explained by Regional Differences in Market Access?

This paper tests the robustness of estimates of market access impact on regional variability in human capital, as previously derived in the NEG literature. Our hypothesis is that these estimates of the coefficient of market access, in fact, capture the effects of regional differences in the industrial mix and the spatial dependence in the distribution of human capital. Results for the Spanish provinces indicate that the estimated impact of market access vanishes and becomes non-significant once these two elements are included in the empirical analysis.human capital, geography, market access, spatial dependence. JEL classification:C21, I21, R12,

Decomposing differences in total factor productivity across firm size

This paper investigates the extent to which the gap in total factor productivity between small and large firms is due to differences in the endowment of factors determining productivity and to the returns associated with these factors. We place particular emphasis on the contribution of differences in the propensity to innovate and in the use of skilled labor across firms of different size. Empirical evidence from a representative sample of Spanish manufacturing firms corroborates that both differences in endowments and returns to innovation and skilled labor significantly contribute to the productivity gap between small and large firms. In addition, it is observed that the contribution of innovation to this gap is caused only by differences in quantity, while differences in returns have no effect; in the case of human capital, however, most of the effect can be attributed to increasing differences in returns between small and large firms.Total Factor Productivity; skilled labor; innovation; firm size; Oaxaca decomposition