Human Capital and Regional Development

Nicola Gennaioli, Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Shleifer

NBER Working Paper No. 17158
Issued in June 2011, Revised in December 2011
NBER Program(s):Economic Fluctuations and Growth, Political Economy

We investigate the determinants of regional development using a newly constructed database of 1569 sub-national regions from 110 countries covering 74 percent of the world's surface and 96 percent of its GDP. We combine the cross-regional analysis of geographic, institutional, cultural, and human capital determinants of regional development with an examination of productivity in several thousand establishments located in these regions. To organize the discussion, we present a new model of regional development that introduces into a standard migration framework elements of both the Lucas (1978) model of the allocation of talent between entrepreneurship and work, and the Lucas (1988) model of human capital externalities. The evidence points to the paramount importance of human capital in accounting for regional differences in development, but also suggests from model estimation and calibration that entrepreneurial inputs and human capital externalities are essential for understanding the data.

Supplementary materials for this paper:

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Acknowledgments

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Document Object Identifier (DOI): 10.3386/w17158

Published: Nicola Gennaioli & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2013. "Human Capital and Regional Development," The Quarterly Journal of Economics, Oxford University Press, vol. 128(1), pages 105-164. citation courtesy of