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Endogenous Growth, Human Capital, and Industry Wages

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  • Winter-Ebmer, Rudolf

Abstract

Lucas' model (1988) of external effects of human capital formation is taken as a starting point for looking at the impact of human capital on wages. Even though most empirical tests of New Growth Theory are made using time-series and cross-sections of countries--with good reasons--I suggest a microeconometric approach in order to test Lucas' basic assumption of external effects of human capital. As a first step, internal effects of education are filtered out by using wage functions for individuals in Austria. In the second step, resulting industry wage premiums are regressed on industry-specific characteristics and, above all, on average human capital in the industry to account for external effects of human capital. Copyright 1994 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research

Suggested Citation

  • Winter-Ebmer, Rudolf, 1994. "Endogenous Growth, Human Capital, and Industry Wages," Bulletin of Economic Research, Wiley Blackwell, vol. 46(4), pages 289-314, October.
  • Handle: RePEc:bla:buecrs:v:46:y:1994:i:4:p:289-314
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    Cited by:

    1. Gruetter, Max & Lalive, Rafael, 2009. "The importance of firms in wage determination," Labour Economics, Elsevier, vol. 16(2), pages 149-160, April.
    2. Vassilis Monastiriotis, 2002. "Human capital and wages: evidence for external effects from the UK regions," Applied Economics Letters, Taylor & Francis Journals, vol. 9(13), pages 843-846.
    3. Louis Lévy-Garboua, 1994. "Formation sur le tas et rendements de l'expérience : un modèle de diffusion du savoir," Économie et Prévision, Programme National Persée, vol. 116(5), pages 79-88.
    4. Ozan Bakis & Nurhan Davutyan & Haluk Levent & Sezgin Polat, 2010. "External Returns to Higher Education in Turkey," Working Papers 517, Economic Research Forum, revised 04 Jan 2010.
    5. Winter-Ebmer, Rudolf & Zweimuller, Josef, 1999. "Intra-Firm Wage Dispersion and Firm Performance," Kyklos, Wiley Blackwell, vol. 52(4), pages 555-572.
    6. Winter-Ebmer, Rudolf, 1996. "Wage curve, unemployment duration and compensating differentials," Labour Economics, Elsevier, vol. 3(4), pages 425-434, December.
    7. Zweimuller, Josef & Barth, Erling, 1994. "Bargaining Structure, Wage Determination, and Wage Dispersion in 6 OECD Countries," Kyklos, Wiley Blackwell, vol. 47(1), pages 81-93.
    8. Kirby, Simon & Riley, Rebecca, 2008. "The external returns to education: UK evidence using repeated cross-sections," Labour Economics, Elsevier, vol. 15(4), pages 619-630, August.
    9. World Bank, 2003. "Lifelong Learning in the Global Knowledge Economy : Challenges for Developing Countries," World Bank Publications, The World Bank, number 15141, January.
    10. Barth, Erling & Zweimuller, Josef, 1992. "Labor Market Institutions and the Industry Wage Distribution: Evidence from Austria, Norway, and the U.S," Institute for Research on Labor and Employment, Working Paper Series qt1811h146, Institute of Industrial Relations, UC Berkeley.
    11. Sascha Sardadvar & Christian Reiner, 2017. "Does the presence of high-skilled employees increase total and high-skilled employment in the long run? Evidence from Austria," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 44(1), pages 59-89, February.
    12. Zanchi, Luisa, 1998. "Interindustry wage differentials in dummy variable models," Economics Letters, Elsevier, vol. 60(3), pages 297-301, September.
    13. Kevin Reilly & Luisa Zanchi, 2002. "Industry Wage Differentials: How Many, Big and Significant Are They?," Labor and Demography 0209001, EconWPA.
    14. Michael Shields & Gail Shields, 2009. "Estimating external returns to education in the US: a production function approach," Applied Economics Letters, Taylor & Francis Journals, vol. 16(11), pages 1089-1092.
    15. Shields, Michael P., 2008. "Why Should State Government Invest in College Education? An Equilibrium Approach for the US in 2000," IZA Discussion Papers 3569, Institute for the Study of Labor (IZA).
    16. Chris Sakellariou, 2001. "Identifying the external effects of human capital: a two-stage approach," Applied Economics Letters, Taylor & Francis Journals, vol. 8(3), pages 191-194.
    17. Chris Sakellariou & Ramin Maysami, 2004. "Lucas type external effects of human capital: strong evidence using microdata," Applied Economics Letters, Taylor & Francis Journals, vol. 11(6), pages 343-346.

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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