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The Impact of Human Capital (Health and Education) on Labor Productivity; a Composite Model Approach- a Case Study of Iran

Author

Listed:
  • Alaeddin Ezoji

    (Department of Economics, Tarbiat Modarres University (TMU), Tehran, Iran.)

  • Abbass Assari

    (Department of Economics and Economic Research Institute, Tarbiat Modarres University (TMU), Tehran, Iran.)

  • Mohammad Reza Vaez Mahdavi

    (Department of Health Economics, Shahed University, Tehran, Iran.)

  • Esfandiar Jahangard

    (Department of Economics, Allame Tabatabai’e University, Tehran, Iran.)

Abstract

Productivity promotion has received a key attention in contemporary macroeconomic analysis. Productivity of labor driven, in particular, by human capital (i.e. health and education), is seen vitally more important. Labor qualities in terms of health and education (treated as flow and stock variables), have a bearing on labor productivity. The main objective of this paper is to identify the influence on productivity of health and education and delineate their relative impact, using a composite approach to human capital. Towards this end, an AutoregressiveDistributed Lag (ARDL) technique was applied to measure labor productivity over the period 1974-2014. Based on the result of model findings, attempt was made to evaluate their short and long term effects. The model applied in this paper has examined the impact of two key variables i.e. per capita capital and capacity index, in addition to human capital index (health and education) influencing collectively on labor productivity. The results indicate that all variables (Excluding the index of composite Human Capital, flow) are bearing a positive and significant impact on labor productivity in the long run. The coefficient of composite human capital index (health and education, flow variables) was greater than that of composite human capital (health and education, stock variables).

Suggested Citation

  • Alaeddin Ezoji & Abbass Assari & Mohammad Reza Vaez Mahdavi & Esfandiar Jahangard, 2019. "The Impact of Human Capital (Health and Education) on Labor Productivity; a Composite Model Approach- a Case Study of Iran," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 23(2), pages 373-397, Spring.
    • Handle: RePEc:eut:journl:v:23:y:2019:i:2:p:373
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