KDI Journal of Economic Policy

Korea Development Institute (한국개발연구원)
권호 표지

How Large are Local Human Capital Spillovers?: Evidence from Korea

  • Received : 2016.05.17
  • Published : 2016.11.30
Download PDF
⟨ Previous Next ⟩

Abstract

This paper examines the empirical magnitude of local human capital spillovers in Korea during the 1980s and mid-1990s. Local human capital spillovers exists if plants in regions with a higher level of human capital can produce more given their own amount of input (Moretti 2004c). In particular, this paper explores an educational reform in South Korea which exogenously induced a large amount of variation in regional human capital levels. Using annually collected plant level data, I explore the effect of changes in the regional human capital levels induced by this reform on plant productivity in Korea. My results suggest that this effect is limited. I find a positive correlation between a regional level of human capital and plant productivity. However, after further addressing endogeneity using an instrumental variable, the effect of the overall regional human capital level on productivity decreases and becomes statistically insignificant.

Keywords

References

  1. Acemoglu, D. 1996. "A Microfoundation for Social Increasing Returns in Human Capital Accumulation." The Quarterly Journal of Economics 111 (3): 779-804. https://doi.org/10.2307/2946672
  2. Acemoglu, D. and Angrist, J. 2000. "How Large are Human-capital Externalities? Evidence from Compulsory-schooling Laws." In Nber macroeconomics annual 2000, volume 15 (p. 9-74). National Bureau of Economic Research, Inc.
  3. Arrow, K. J. 1962. "The Economic Implications of Learning by Doing." The Review of Economic Studies 29 (3): 155-173. https://doi.org/10.2307/2295952
  4. Choi, K.-S. 1996. "The Impact of Shifts in Supply of College Graduates: Repercussion of Educational Reform in Korea." Economics of Education Review 15 (1): 1-9. https://doi.org/10.1016/0272-7757(95)00031-3
  5. Ciccone, A. and Peri, G. 2006. "Identifying Human-capital Externalities: Theory with Applications." Review of Economic Studies 73 (2): 381-412. https://doi.org/10.1111/j.1467-937X.2006.00380.x
  6. de la Fuente, A. and R. Domenech. 2001. "Schooling Data, Technological Diffusion, and the Neoclassical Model." American Economic Review 91 (2): 323-327. https://doi.org/10.1257/aer.91.2.323
  7. Greenstone, M., R. Hornbeck, and E. Moretti. 2010. "Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings." Journal of Political Economy 118 (3): 536-598. https://doi.org/10.1086/653714
  8. Hall, R. E. and C. I. Jones. 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?" The Quarterly Journal of Economics 114 (1): 83-116. https://doi.org/10.1162/003355399555954
  9. Huber, F. 2012. "Do Clusters Really Matter for Innovation Practices in Information Technology? Questioning the Significance of Technological Knowledge Spillovers." Journal of Economic Geography 12 (1): 107-126. https://doi.org/10.1093/jeg/lbq058
  10. Iranzo, S. and G. Peri. 2009. "Schooling Externalities, Technology, and Productivity: Theory and Evidence from U.S. States." The Review of Economics and Statistics 91 (2): 420-431. https://doi.org/10.1162/rest.91.2.420
  11. Jacobs, J. 1970. The Economy of Cities. New York: Vintage.
  12. Lange, F. and R. Topel. 2006. "The Social Value of Education and Human Capital." In Handbook of the Economics of Education, Vol. 1, edited by E. Hanushek adn F. Welch, 459-509. Elsevier.
  13. Levinsohn, J. and A. Petrin. 2003. "Estimating Production Functions Using Inputs to Control for Unobservables." The Review of Economic Studies 70 (2): 317-341. https://doi.org/10.1111/1467-937X.00246
  14. Lucas, R. 1988. "On the Mechanics of Economic Development." Journal of Monetary Economics 22 (1): 3-42. https://doi.org/10.1016/0304-3932(88)90168-7
  15. Lucas, R. 1993. "Making a Miracle." Econometrica 61 (2): 251-272. https://doi.org/10.2307/2951551
  16. Marshall, A. 1890. The Principles of Economics. New York: Macmillan.
  17. Mas, A. and E. Moretti. 2009. "Peers at Work." American Economic Review 99 (1): 112-145. https://doi.org/10.1257/aer.99.1.112
  18. Moretti, E. 2004a. "Estimating the Social Return to Higher Education: Evidence from Longitudinal and Repeated Cross-sectional Data." Journal of Econometrics 121 (1-2): 175-212. https://doi.org/10.1016/j.jeconom.2003.10.015
  19. Moretti, E. 2004b. "Human Capital Externalities in Cities." In Handbook of Regional and Urban Economics, Vol. 4, edited by J. V. Henderson and J. F. Thiss, 2243-2291. Elsevier.
  20. Moretti, E. 2004c. "Workers' Education, Spillovers, and Productivity: Evidence from Plantlevel Production Functions." American Economic Review 94 (3): 656-690. https://doi.org/10.1257/0002828041464623
  21. Niehaus, P. 2012. Education and Knowledge Spillovers. UC San Diego. Mimeo.
  22. Olley, G. S. and A. Pakes. November, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry." Econometrica 64 (6): 1263-1297. https://doi.org/10.2307/2171831
  23. Rauch, J. E. 1993. "Productivity Gains from Geographic Concentration of Human Capital: Evidence from the Cities." Journal of Urban Economics 34 (3): 380-400. https://doi.org/10.1006/juec.1993.1042
  24. Romer, P. M. 1986. "Increasing Returns and Long-run Growth." Journal of Political Economy 94 (5): 1002-1037. https://doi.org/10.1086/261420
  25. Rosenthal, S. and W. Strange. 2008. "The Attenuation of Human Capital Spillovers." Journal of Urban Economics 64 (2): 373-389. https://doi.org/10.1016/j.jue.2008.02.006
  26. Rudd, J. 2000. "Empirical Evidence on Human Capital Spillovers." Federal Reserve Board. Mimeo.