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Spillovers from Local Market Human Capital and the Spatial Distribution of Productivity in Malaysia

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Author Info

  • Conley Timothy G.

    ()
    (University of Chicago, GSB)

  • Flyer Fredrick

    ()
    (Lexecon, Inc.)

  • Tsiang Grace R

    ()
    (University of Chicago)

Abstract

This paper examines whether spillovers from local market human capital are important in explaining the distribution of productivity across Malaysia. We develop an empirical method for describing local human capital distributions based on the idea that spillovers are limited in scope by costs of interaction or economic distance between agents. We use estimates of the economic distance between agents to construct measures of local market human capital based on schooling rates of the population within a given radius. These measures are then used in estimating equations obtained from a simple local public goods model. Our regressions are estimated using spatial GMM, allowing for general spatial correlation across observations as a function of economic distance. We find positive wage and rent differentials associated with local human capital, evidence consistent with productive human capital spillovers. Our results for rent differentials obtain with two distinct human capital measures; however, those for wage differentials depend on the human capital measure used.

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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 3 (2003)
Issue (Month): 1 (December)
Pages: 1-47

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Handle: RePEc:bpj:bejeap:v:advances.3:y:2003:i:1:n:5

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Cited by:
  1. Véronique Gille, 2012. "Education spillovers: empirical evidence in rural India," Indian Growth and Development Review, Emerald Group Publishing, Emerald Group Publishing, vol. 5(1), pages 4-24, April.
  2. Ottaviano, Gianmarco I.P. & Pinelli, Dino, 2006. "Market potential and productivity: Evidence from Finnish regions," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 36(5), pages 636-657, September.
  3. Gilles Duranton, 2007. "From cities to productivity and growth in developing countries," Working Papers tecipa-306, University of Toronto, Department of Economics.
  4. Timothy Conley & Francesca Molinari, 2005. "Spatial correlation robust inference with Errors in Location or Distance," CeMMAP working papers, Centre for Microdata Methods and Practice, Institute for Fiscal Studies CWP10/05, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  5. Gerald Carlino & William R. Kerr, 2014. "Agglomeration and Innovation," NBER Working Papers 20367, National Bureau of Economic Research, Inc.
  6. Isacsson, Gunnar, 2005. "External effects of education on earnings: Swedish evidence using matched employee-establishment data," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2005:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.

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