Human Capital Concentration and the Place-Based Policies in Chile

Chile is one of the most concentrated country in the world. Most of the 40 percent of the population live in the capital city, Santiago, where around 45 percent of the GDP is produced. At the same time, most of the policies promoting welfare are focus on people and they are spatially blind. This paper shows how the current array keeps concentrating people, especially with potential high human capital, around Santiago, and assesses whether this happened for difference in quality of life and opportunities or difference in the quality of the universities. The data available on individuals, who end the high school and take the university admission test, that lets students applying to the university and program that they wish to go, allows identifying the region of origin of the students, the region where the university that they apply is located and where they were selected. Three programs are chosen for this study given the quantity of people that apply to them and because they are available across different cities in the country are pedagogy, engineering and physician. In addition, in Chile they are more than 60 universities, however only the traditional 25 are the one that use this selection system for the period of this study that goes from 2006 to 2009. Recently some new universities have get into the system. Assuming that most of the students end up working around the city where they got the degree, we use an aggregate discrete choice model to develop a methodology that consist in following the destination of the students who got the best scores in the university admission test. Those students can choose any university in the country, and the majority prefers to go to those in the capital city. Contrasting with these results, lower scores have an inverse pattern. When we test if it is explained by the difference in the quality of life between cities versus the differences among the quality of the universities, the former has a larger explanatory power, which bring back the discussion if the policy should be oriented to place or people. It means, that will not be enough focus on increase the quality of the universities across the territories to attract better student to universities outside Santiago. It will need and strong complementary policies making those cities more interesting for the potential high human capital applicant.