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Does Human Capital Stimulate Investment In Physical Capital? Evidence From A Cost System Framework

  • Enrique Lopez-Bazo

    ()

    (Faculty of Economics, University of Barcelona)

  • Rosina Moreno

    ()

    (Faculty of Economics, University of Barcelona)

The direct effect of human capital on economic growth has been widely analysed in the economic literature. This paper, however, focuses on its indirect effect as a stimulus for private investment in physical capital. The methodological framework used is the duality theory, estimating a cost system aggregated with human capital. Empirical evidence is given for Spain for the period 1980-2000. We provide evidence on the indirect effect of human capital in making private capital investment more attractive. Among the main explanations for this process, we observe that higher worker skill levels enable higher returns to be extracted from investment in physical capital.

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File URL: http://www.ub.edu/irea/working_papers/2007/200717.pdf
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Paper provided by University of Barcelona, Research Institute of Applied Economics in its series IREA Working Papers with number 200717.

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Length: 23 pages
Date of creation: Dec 2007
Date of revision: Dec 2007
Handle: RePEc:ira:wpaper:200717
Contact details of provider: Postal: Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona
Web page: http://www.ub.edu/irea/

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