Nonlinear Effects of Human Capital and R&D on TFP: Evidence from European Regions

Arkadiusz Kijek and Tomasz Kijek
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Arkadiusz Kijek: Faculty of Economics, Maria Curie-Sklodowska University, 20-031 Lublin, Poland
Tomasz Kijek: Faculty of Economics, Maria Curie-Sklodowska University, 20-031 Lublin, Poland

Sustainability, 2020, vol. 12, issue 5, 1-14

Abstract: The aim of the paper is to study the impact of human capital and R&D on Total Factor Productivity (TFP) from a nonlinear perspective. In the spirit of the theory of innovation-driven growth and models with thresholds in human capital and low-growth equilibria, we hypothesize that the impact of human capital and R&D on TFP is nonlinear. We also make an attempt to explain complementarities between R&D expenditures and human capital, applying developments in the R&D-based growth models. We use spatial panel data models to estimate the link among R&D, human capital, and TFP across the European regions between 2009 and 2014. Empirical evidence shows that there are decreasing returns to human capital and R&D in the European regional space. Moreover, R&D and human capital turn out to be strategic complements. Finally, regional TFP is found to be positively affected by TFP of neighboring regions.

Keywords: human capital; R&D; TFP; regions (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:12:y:2020:i:5:p:1808-:d:326221

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