Human capital and structural change: how do they interact with each other in growth?

Dalila Nicet - Chenaf () and Eric Rougier

Cahiers du GREThA (2007-2019) from Groupe de Recherche en Economie Théorique et Appliquée (GREThA)

Abstract: Human capital measures (schooling) are poorly significant in explaining growth for developing countries. An explanation is that increases in human capital have no significant effect on growth if this human capital is misallocated and underemployed. In a simple two-sector model of a small open economy, we show that the effect of education on growth is more significant if the country has entered into the structural change that raises the demand for skilled labour. Moreover, we give a special attention to the role of entrepreneurs in the increase in the demand for skills in the modern sector and propose to measure it through the diversification of exports. We then derive an econometric specification from a simple two-sector model of growth with structural change and different levels of skills. From a sample of emerging economies, we provide econometric evidence that the reduction in the traditional share of GDP and a higher diversification of export both have a positive influence on growth rates. We also show that if the drop in traditional activities is to matter for growth, it is not through the skill reallocation from traditional to modern activities whereas export diversification is a factor of higher growth, directly but also through the enhancement of the effect of human capital on the increase of GDP. Then, the point could be that if reallocation of skills is to matter, it is more probably through shifts among the industrial sector, from the older to the newer activities than across sectors, from the traditional to the modern.

Keywords: Human capital; growth; structural change (search for similar items in EconPapers)
JEL-codes: C23 O14 O15 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-fdg, nep-hrm and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://cahiersdugretha.u-bordeaux.fr/2009/2009-14.pdf (application/pdf)

Related works:
Working Paper: Human capital and structural change: how do they interact with each other in growth? (2009)
Working Paper: Human capital and structural change: how do they interact with each others in growth (2009)
Working Paper: Human capital and structural change: how do they interact with each other in growth? (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:grt:wpegrt:2009-14

Access Statistics for this paper

More papers in Cahiers du GREThA (2007-2019) from Groupe de Recherche en Economie Théorique et Appliquée (GREThA) Contact information at EDIRC.
Bibliographic data for series maintained by Ernest Miguelez ().