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Augmented Solow Model with Mincerian Schooling and Infrastructure Externalities

Author

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  • Tomasz Brodzicki

    (Faculty of Economics, University of Gdansk)

Abstract

According to Crescezni and Rodriguez-Pose (2008) backward European regions should follow balanced strategies in which infrastructure development is coordinated with policies aimed at developing human capital and the innovative potential of regions. In order to asses their postulates we extend the analysis of Carstensen et al. (2009) further augmenting the neoclassical Solow Model to incorporate both Mincerian schooling externalities and infrastructure externalities in a single theoretical framework. Infrastructure is introduced into the model in a manner similar to Hicks-neutral technological change – potentially rising overall efficiency of economy. We do not assume ax ante the existence of positive externality. Solving the model we obtain a structural equation which is then econometrically tested in order to obtain estimates of both education and infrastructure externalities for a group of European states. Estimates for panel data model bring interesting results. Infrastructure and education externalities are both postitive and statistically significant. The education externality is however significantly stronger for CEE countries while infrastructure externality is not statistically significant for the same group of countries.

Suggested Citation

  • Tomasz Brodzicki, 2011. "Augmented Solow Model with Mincerian Schooling and Infrastructure Externalities," Working Papers of Economics of European Integration Division 1101, The Univeristy of Gdansk, Faculty of Economics, Economics of European Integration Division.
    • Handle: RePEc:gda:wpaper:1101
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    File URL: http://gnu.univ.gda.pl/~keie/aio18.pdf
    File Function: First version, 2011
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    Cited by:

    1. Jacek Adam Zaucha, 2014. "Evolution, essence and measurement of territorial cohesion," Working Papers 1401, Instytut Rozwoju, Institute for Development.

    More about this item

    Keywords

    economic growth; human capital; infrastructure development; augmented Solow model;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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