Is Portuguese regional growth schumpeterian? An empirical assessment of the relation between schooling, firm destruction and firm productivity
AbstractA study focusing Portuguese textile firms dynamics during the eighties and nineties (Teixeira, 2002; Teixeira and Vieira, 2004) demonstrated that plants which tended to hire workers with higher levels of human capital (education) were those that, on average, presented a lower probability of survival. Macro-level evidence on the relation between human capital, per capita income and productivity seems to be at odds with the micro evidence reported. Specifically, at the economy level the bulk of studies found a positive relation between human capital accumulation and productivity dynamics (Michie et al, 2002; Teixeira and Fortuna, 2003; Maudos et al, 2003) which, at first glance, seems hard to match with the micro-level evidence suggesting that the accumulation of human capital is associated with higher failure rates on firm’s behalf. The potential explanation for this may be related with the fact that firms can be positioned into one of the two possible states – low productivity and low risk or high productivity and high risk. In order for a low productivity-low risk firm to become high productivity-high risk firm it has to hire top educated workers. Successful high productivity-high risk firms, i.e, those that survive, are the ‘engine of growth’. This may explain that regions, which have higher levels of human capital, be those that, in the medium term, have higher levels of per capita income and higher firm failure rates. This association of higher per capita income/productivity levels and higher firm destruction rates translates the schumpeterian issue of creative destruction (Schumpeter, 1942). In the present paper we try to validate this theoretical explanation using empirical evidence at the regional level. Based on panel data relative to 27 Portuguese regions (NUTIII) over the period 1992-1999, we estimate an econometric model of the relation between human capital, firm productivity and firm failure rates. Estimation results suggest important policy implications, namely that policy measures involving schooling incentives, i.e., human capital supply side focused policies, should be replaced by more human capital demand side focused policies aiming to easy bankruptcy processes. Keywords: Schooling, Productivity, Firm Survival, Regions
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by European Regional Science Association in its series ERSA conference papers with number ersa04p134.
Date of creation: Aug 2004
Date of revision:
Contact details of provider:
Postal: Welthandelsplatz 1, 1020 Vienna, Austria
Web page: http://www.ersa.org
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-11-09 (All new papers)
- NEP-EDU-2005-11-09 (Education)
- NEP-ENT-2005-11-09 (Entrepreneurship)
- NEP-GEO-2005-11-09 (Economic Geography)
- NEP-TID-2005-11-09 (Technology & Industrial Dynamics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bartel, Ann P & Lichtenberg, Frank R, 1987. "The Comparative Advantage of Educated Workers in Implementing New Technology," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 1-11, February.
- Griliches, Zvi, 1969. "Capital-Skill Complementarity," The Review of Economics and Statistics, MIT Press, vol. 51(4), pages 465-68, November.
- Majumdar, Sumit K, 1998. "The Impact of Human Capital Quality on the Boundaries of the Firm in the US Telecommunications Industry," Industrial and Corporate Change, Oxford University Press, vol. 7(4), pages 663-77, December.
- Bates, Timothy, 1990. "Entrepreneur Human Capital Inputs and Small Business Longevity," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 551-59, November.
- Ann P. Bartel, 1989. "Formal Employee Training Programs and Their Impact on Labor Produc- tivity: Evidence from a Human Resources Survey," NBER Working Papers 3026, National Bureau of Economic Research, Inc.
- Baldwin,John R. & Gorecki,Paul With contributions by-Name:Caves,Richard E., 1995.
"The Dynamics of Industrial Competition,"
Cambridge University Press, number 9780521465618, April.
- Joaquín Maudos Villarroya & José Manuel Pastor Monsálvez & Lorenzo Serrano Martínez, 1998.
"- Human Capital In Oecd Countries: Technical Change, Efficency And Productivity,"
Working Papers. Serie EC
1998-19, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Joaquin Maudos & Jose Manuel Pastor & Lorenzo Serrano, 2003. "Human capital in OECD countries: Technical change, efficiency and productivity," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(4), pages 419-435.
- Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
- Carlton, Dennis W, 1983. "The Location and Employment Choices of New Firms: An Econometric Model with Discrete and Continuous Endogenous Variables," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 440-49, August.
- Fleming, M C, 1970. "Inter-Firm Differences in Productivity and Their Relation to Occupational Structure and Size of Firm," The Manchester School of Economic & Social Studies, University of Manchester, vol. 38(3), pages 223-45, September.
- Lisa M. Lynch & Sandra E. Black, 1995.
"Beyond the Incidence of Training: Evidence from a National Employers Survey,"
NBER Working Papers
5231, National Bureau of Economic Research, Inc.
- Lisa M Lynch & Sandra E Black, 2002. "Beyond the Incidence of Training: Evidence from a National Employers Survey," Working Papers 02-05, Center for Economic Studies, U.S. Census Bureau.
- Mata, Jose & Portugal, Pedro, 1994. "Life Duration of New Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 42(3), pages 227-45, September.
- Maglen, L R, 1990. "Challenging the Human Capital Orthodoxy: The Education-Productivity Link Re-examined," The Economic Record, The Economic Society of Australia, vol. 66(195), pages 281-94, December.
- Charles S. Benson & Paul R. Lohnes, 1959. "Skill requirements and industrial training in durable goods manufacturing," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 12(4), pages 540-553, July.
- Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
- Ann P. Bartel, 1991. "Productivity Gains From the Implementation of Employee Training Programs," NBER Working Papers 3893, National Bureau of Economic Research, Inc.
- Psacharopoulos, George, 1996. "Economics of education: A research agenda," Economics of Education Review, Elsevier, vol. 15(4), pages 339-344, October.
- David Blanchflower & Simon Burgess, 1996.
"New Technology and Jobs: Comparative Evidence from a Two Country Study,"
CEP Discussion Papers
dp0285, Centre for Economic Performance, LSE.
- David Blanchflower & Simon Burgess, 1998. "New Technology And Jobs: Comparative Evidence From A Two Country Study," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 5(2-4), pages 109-138.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier).
If references are entirely missing, you can add them using this form.