Published online by Cambridge University Press: 14 September 2016
This paper presents a theoretical and empirical investigation of the relationship between human capital composition and economic growth. In the theoretical analysis, we allow for nonconstant returns to scale in technological activities. Differently from previous literature, our results show that, under broad and plausible model parameterizations, the marginal growth effect of skilled workers is increasing with the distance to the frontier for sufficiently poor countries while it is decreasing (in agreement with the existing literature) only for countries close to the technological frontier. Our empirical analysis provides robust evidence for this theoretical prediction by using a 10-year panel of 85 countries for the years in between 1960 and 2000, as well as by using the System Generalized Methods of Moments (GMM) technique to address the problem of endogeneity. Results are robust to different proxies of human capital and different specifications.
We would like to thank Philippe Aghion, Luca Deidda, Alessio Moro, Fabiano Schivardi for their suggestions and all the participants at the seminar at the University of Cagliari, University of Sassari, and University of Barcelona as well those at the conferences in Huelva (XIV Encuentro de Economia Aplicada), Saint Petersburg (DEGIT XVI), New Delhi (8th Annual Conference on Economic Growth and Development), Rimini (4th Workshop on Developments in Macro and Growth), Bologna (54th Meeting of the Italian Economists Association), and Manchester (125th Royal Economic Society Conference). E-mail addresses: email@example.com and firstname.lastname@example.org. The research leading to these results has received funding from the Regional Government of Sardinia under “Legge 7 (2007)” grant. The views expressed here are solely of the authors and do not reflect the official position of any of the affiliated institutions.