Geographic and sector externalities from highly qualified human capital: the importance of the business service sector

Joilson Dias (), Florian Schumacher and Edinaldo Tebaldi

Applied Economics Letters, 2014, vol. 21, issue 5, 329-334

Abstract: This article develops a simple model where knowledge spillover is related to geography and sectors of the economy. Knowledge externality comes from those with college degree at sector level and the relative size of the business service sector at geographic level. We examine the model using data from Brazilian National Household Survey (PNAD) for the year 2008. We find evidence that sector concentration of highly qualified workers (with at least a college degree) generates knowledge externalities. Hence, workers benefit from the skills of their peers by learning from them. Also complementing the literature, we find a geographic knowledge spillover played by the business service sector. This last result holds even if we estimate rates of return to education by sectors or estimate wage regressions over sectors (not shown). This article also provides evidence of increasing returns to schooling in Brazil.

Date: 2014
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DOI: 10.1080/13504851.2013.859367

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