National and Regional Patterns of Convergence and Divergence
Edited by John Adams and Francesco Pigliaru
Chapter 10: Human capital and growth in the European regions: does allocation matter?
Page 257 10. Human capital and growth in the European regions: does allocation matter? Sergio Lodde INTRODUCTION The purpose of this chapter is to give a contribution to the analysis of the relationship between human capital and economic growth in a regional context. The central question is whether taking into account the allocation of human capital among different activities which may be more or less growth enhancing, helps to clarify why this factor, theoretically so relevant in the growth literature, fails to give consistent results in the empirical analysis. The role of human capital in the growth process was extensively examined by economists in the 1960s and 1970s as an extension of the neoclassical growth model aimed at explaining the Solow residual and, more recently, within the framework of endogenous growth theory. While there is general agreement on the hypothesis that the quality of the labour force and the amount of technical knowledge embodied in it play a crucial role in the growth performance of the economy no firm conclusion has been reached on this point in the empirical analysis. Several explanations have been given for this anomaly but none of them has yet gained a general consensus among the scholars of the subject. One hypothesis suggests that not all the skills generated by education are equally growth enhancing, their contribution to economic growth depending which activities they are applied to. According to the ruling structure of payoffs some skills may be allocated to rentseeking activities. Although they can...
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