Income convergence prospects in Europe: Assessing the role of human capital dynamics
AbstractWe employ income projection models based on human capital dynamics in order to assess quantitatively the role that educational improvements are expected to play as a driver of future income convergence in Europe. We concentrate on income convergence dynamics between emerging economies in Central and Eastern Europe and Western European countries during the next 50 years. Our results indicate that improvements in human capital contribute significantly to the income convergence potential of European emerging economies. Using realistic scenarios, we quantify the effect that future human capital investments paths are expected to have in terms of speeding up the income convergence process in the region. The income projection exercise shows that the returns to investing in education in terms of income convergence in Europe could be sizeable, although it may take relatively long for the poorer economies of the region to rip the growth benefits.
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Bibliographic InfoPaper provided by Vienna University of Economics, Department of Economics in its series Department of Economics Working Papers with number wuwp143.
Date of creation: Jul 2012
Date of revision:
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Economic growth; income convergence; human capital; income projections; Europe; emerging economies;
Other versions of this item:
- Crespo Cuaresma, Jesus & Havettová, Miroslava & Lábaj, Martin, 2013. "Income convergence prospects in Europe: Assessing the role of human capital dynamics," Economic Systems, Elsevier, vol. 37(4), pages 493-507.
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe
- I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
- P27 - Economic Systems - - Socialist Systems and Transition Economies - - - Performance and Prospects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-29 (All new papers)
- NEP-EUR-2012-07-29 (Microeconomic European Issues)
- NEP-HRM-2012-07-29 (Human Capital & Human Resource Management)
- NEP-TRA-2012-07-29 (Transition Economics)
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