Income Convergence Prospects in Europe: Assessing the Role of Human Capital Dynamics

Posted: 13 Oct 2015

See all articles by Jesus Crespo Cuaresma

Jesus Crespo Cuaresma

Vienna University of Economics and Business

Miroslava Havettova

University of Economics in Bratislava

Martin Labaj

University of Economics in Bratislava

Abstract

We employ income projection models based on human capital dynamics in order to assess quantitatively the role that educational improvements are expected to play as a driver of future income convergence in Europe. We concentrate on income convergence dynamics between emerging economies in Central and Eastern Europe and Western European countries during the next 50 years. Our results indicate that improvements in human capital contribute significantly to the income convergence potential of European emerging economies. Using realistic scenarios, we quantify the effect that future human capital investment paths are expected to have in terms of speeding up the income convergence process in the region. The income projection exercise shows that the returns to education in terms of income convergence in Europe could be sizeable, although it may take relatively long for the poorer economies of the region to rip the growth benefits.

Keywords: Economic growth, Income convergence, Human capital, Income projections, Europe, Emerging economies

JEL Classification: O47, O52, I25, P27

Suggested Citation

Crespo Cuaresma, Jesus and Havettova, Miroslava and Labaj, Martin, Income Convergence Prospects in Europe: Assessing the Role of Human Capital Dynamics. Economic Systems, Vol. 37, No. 4, 2013, Available at SSRN: https://ssrn.com/abstract=2673552

Jesus Crespo Cuaresma (Contact Author)

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

Miroslava Havettova

University of Economics in Bratislava ( email )

Dolnozemsk√° cesta 1
Bratislava, 852 35
Slovakia

Martin Labaj

University of Economics in Bratislava ( email )

Dolnozemsk√° cesta 1
Bratislava, 852 35
Slovakia

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