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Human capital in economic development: from labour productiviey to macroeconomic impact

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  • Kristinn Hermannsson

    (Centre for Educational Change, University of Glasgow)

  • Patrizio Lecca

    (Department of Economics, University of Strathclyde)

Abstract

Micro-econometric evidence reveals high private returns to education, most prominently in low-income countries. However, it is disputed to what extent this translates into a macro-economic impact. This paper projects the increase in human capital from higher education in Malawi and uses a dynamic applied general equilibrium model to estimate the resulting macroeconomics impact. This is contingent upon endogenous adjustments, in particular how labour productivity affects competitiveness and if this in turn stimulates exports. Choice among commonly applied labour market assumptions and trade elasticities results in widely different outcomes. Appraisal of such policies should consider not only the impact on human capital stocks, but also adjustments outside the labour market.

Suggested Citation

  • Kristinn Hermannsson & Patrizio Lecca, 2015. "Human capital in economic development: from labour productiviey to macroeconomic impact," Working Papers 1501, University of Strathclyde Business School, Department of Economics.
    • Handle: RePEc:str:wpaper:1501
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    More about this item

    Keywords

    human capital; higher education; labour markets; trade; Malawi;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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