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Human Capital and Regional Development

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  • Nicola Gennaioli
  • Rafael La Porta
  • Florencio Lopez-de-Silanes
  • Andrei Shleifer

Abstract

We investigate the determinants of regional development using a newly constructed database of 1569 sub-national regions from 110 countries covering 74 percent of the world’s surface and 96 percent of its GDP. We combine the cross-regional analysis of geographic, institutional, cultural, and human capital determinants of regional development with an examination of productivity in several thousand establishments located in these regions. To organize the discussion, we present a new model of regional development that introduces into a standard migration framework elements of both the Lucas (1978) model of the allocation of talent between entrepreneurship and work, and the Lucas (1988) model of human capital externalities. The evidence points to the paramount importance of human capital in accounting for regional differences in development, but also suggests from model estimation and calibration that entrepreneurial inputs and human capital externalities are essential for understanding the data.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17158.

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Date of creation: Jun 2011
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Handle: RePEc:nbr:nberwo:17158

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