Human Capital in Economic Development: From Labour Productivity to Macroeconomic Impact1. Issue 1 (5th January 2016)

• Record Type: Journal Article
• Authors: Hermannsson, Kristinn; Lecca, Patrizio
• Is Part Of: Economic papers. Volume 35:Issue 1(2016:Mar.)
• Page Start: 24
• Page End: 36
• Publication Date: 2016-01-05
• Subjects: human capital -- economic development -- higher education -- labour markets -- trade -- Malawi; Economics -- Periodicals; Australia -- Economic conditions -- Periodicals; 330.05
• DOI: 10.1111/1759-3441.12126
• Languages: English
• ISSNs: 0812-0439

Abstract

Abstract : Microeconometric evidence reveals high private returns to education, most prominently in low‐income countries. However, it is disputed to what extent this translates into a macroeconomic 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 macroeconomic impact. This is contingent upon endogenous adjustments, in particular how labour productivity affects competitiveness and if this in‐turn stimulates exports. Choice among 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.