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Skill and Cross-National Economic Performance

  • Florida, Richard

    (Martin Prosperity Institute)

  • Mellander, Charlotta

    ()

    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

The role of human capital in shaping cross-national economic performance is well-understood. But human capital is an indirect measure of skill, based on educational attainment. We introduce and test a more direct measure of skill, based on work that is actually performed, measured by occupation. Recent empirical studies have shown that such occupational “classes” play an important role in regional economic performance, out-performing human capital in some cases. We develop a measure of occupational skill and examine its relation to in cross-national economic performance. We explicitly compare this measure to conventional measures of human capital (based on educational attainment) through formal models of economic performance for 55 to 78 countries, using three measures of economic performance – economic output (GDP per capita), productivity (total factor productivity) and innovative performance (patents). The results confirm the hypothesis, indicating that our occupation-based measure closely is associated with all three measures of economic performance and also that it consistently performs better than human capital in these models.

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Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 220.

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Length: 28 pages
Date of creation: 11 Feb 2010
Date of revision:
Handle: RePEc:hhs:cesisp:0220
Contact details of provider: Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
Phone: +46 8 790 95 63
Web page: http://www.infra.kth.se/cesis/
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  1. Glaeser, Edward L. & Scheinkman, JoseA. & Shleifer, Andrei, 1995. "Economic growth in a cross-section of cities," Journal of Monetary Economics, Elsevier, vol. 36(1), pages 117-143, August.
  2. Simon, Curtis J., 1998. "Human Capital and Metropolitan Employment Growth," Journal of Urban Economics, Elsevier, vol. 43(2), pages 223-243, March.
  3. Douglas Gollin, 2001. "Getting Income Shares Right," Department of Economics Working Papers 2001-11, Department of Economics, Williams College.
  4. Christopher R. Berry & Edward L. Glaeser, 2005. "The Divergence of Human Capital Levels Across Cities," NBER Working Papers 11617, National Bureau of Economic Research, Inc.
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