Quality of Human and Physical Capital and Technological Gaps across Italian Regions

Regional Studies, 2007

Posted: 15 Jan 2009

See all articles by Vincenzo Scoppa

Vincenzo Scoppa

Università degli Studi della Calabria - Department of Economics and Statistics

Date Written: July 14, 2007

Abstract

This paper evaluates the relative contribution of factor accumulation and technology in explaining output per worker differences across Italian regions in the period 2000-2004. The contributions of physical and human capital are separately estimated through the variance decomposition of output per worker. Whereas from a basic analysis of development accounting with crude data TFP emerges as a fundamental determinant of output per worker, when more accurate data are used in the estimations of human and physical capital, results change radically, showing a higher importance of factor accumulation with respect to previous standard estimations. Several measures of quality of human and physical capital are introduced: a) individuals' cognitive skills as measured in international test scores; b) region specific rates of return on human capital; c) public investments and public-subsidized investments are weighted differently from private investment in the determination of physical capital stock. We show that better measurement of factor inputs allows a reduction in the solowian "measure of our ignorance".

Keywords: Development Accounting, Human Capital, Physical Capital, TFP, variance decomposition, Problems of Measurement

JEL Classification: O47, E23, E13

Suggested Citation

Scoppa, Vincenzo, Quality of Human and Physical Capital and Technological Gaps across Italian Regions (July 14, 2007). Regional Studies, 2007. Available at SSRN: https://ssrn.com/abstract=1327755

Vincenzo Scoppa (Contact Author)

Università degli Studi della Calabria - Department of Economics and Statistics ( email )

via Ponte Bucci
Arcavacata di Rende, Cosenza 87036
Italy

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