Growth and Crisis
Edited by Matilde Mas and Robert Stehrer
Chapter 12: Skills and the Competitiveness of EU Manufacturing Industries
* Michael Landesmann and Robert Stehrer 12.1 INTRODUCTION The relationship between human capital and productivity growth (i.e., GDP per capita) has widely been discussed in the literature on (endogenous) growth at the macroeconomic level. Important contributions also providing overviews over the relevant topics in this respect are, for example, Barro and Sala-i-Martin (1995) and Aghion and Howitt (1998), and for more recent contributions see Helpman (2004) and European Commission (2006). The role of human capital was particularly emphasized in Mankiw et al. (1992) where human capital was introduced in the Solow model (Solow, 1956) as an ordinary factor of production alongside labour and capital. Empirical work along these lines produced somewhat mixed results where also the measurement of human capital was debated (see De la Fuente and Ciccone, 2003 and Sianesi and van Reenen, 2003 for recent overviews). From a theoretical viewpoint the Mankiw et al. (1992) approach may be questioned in that the treatment of human capital as a direct input is misleading as pointed out by Benhabib and Spiegel (1994). In the latter contribution – based on Nelson and Phelps (1966) – technical progress is a function of the stock of human capital and thus only has an indirect effect; this is in line with contributions from the endogenous growth literature (see e.g., Romer, 1990). Although there are a number of contributions at the total economy level the effect of human capital at the sectoral level is less developed. At the industry level there exists a large literature on the sectoral...
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