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Regional returns to physical capital: are they conditioned by educational attainment?

Author

Listed:
  • Enrique Lopez-Bazo

    (Faculty of Economics, University of Barcelona)

  • Rosina Moreno

    (Faculty of Economics, University of Barcelona)

Abstract
This paper provides novel empirical evidence of the indirect effect of educational attainment on regional economic growth, through its influence on the profitability of investment in physical capital. We test the hypothesis that the regional heterogeneity of the return to physical capital can be directly related to the existing heterogeneity in the educational attainment of workers. The results for the Spanish case support our hypothesis that the higher the educational attainment of workers the greater the returns on investment in physical capital. In fact, this effect seems to be sufficiently strong to have counterbalanced the traditional mechanism of decreasing returns to capital accumulation.

Suggested Citation

  • Enrique Lopez-Bazo & Rosina Moreno, 2007. "Regional returns to physical capital: are they conditioned by educational attainment?," IREA Working Papers 200718, University of Barcelona, Research Institute of Applied Economics, revised Dec 2007.
    • Handle: RePEc:ira:wpaper:200718
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    File URL: http://www.ub.edu/irea/working_papers/2007/200718.pdf
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    More about this item

    Keywords

    returns to capital; human capital; productivity; cost system;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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