Human Capital and Macro-Economic Development : A Review of the Evidence
This paper reviews the evidence on the importance of human capital for macro-economic development. Through the lens of a simple aggregate production function, human capital might increase output per capita by directly entering in the production pro...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2018
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| Online Access: | http://documents.worldbank.org/curated/en/406251542645775821/Human-Capital-and-Macro-Economic-Development-A-Review-of-the-Evidence http://hdl.handle.net/10986/30877 |
| Summary: | This paper reviews the evidence on the
importance of human capital for macro-economic development.
Through the lens of a simple aggregate production function,
human capital might increase output per capita by directly
entering in the production process, incentivising the
accumulation of complementary inputs and facilitating the
adoption of new technologies. The paper discusses the
advantages and limitations of three methodological
approaches that have been used to evaluate the importance of
these channels: cross-country regressions, development
accounting and quantitative models. The key findings in the
literature are reviewed, and some of them are replicated
using updated data. The bulk of the evidence suggests that
human capital is an important determinant of cross-country
income gaps, especially when its measurement is broadened to
go beyond simple proxies of educational attainment. The
paper concludes by highlighting promising avenues for future work. |
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