Working Paper: NBER ID: w17158
Authors: Nicola Gennaioli; Rafael La Porta; Florencio Lopez-de-Silanes; Andrei Shleifer
Abstract: We investigate the determinants of regional development using a newly constructed database of 1569 sub-national regions from 110 countries covering 74 percent of the world's surface and 96 percent of its GDP. We combine the cross-regional analysis of geographic, institutional, cultural, and human capital determinants of regional development with an examination of productivity in several thousand establishments located in these regions. To organize the discussion, we present a new model of regional development that introduces into a standard migration framework elements of both the Lucas (1978) model of the allocation of talent between entrepreneurship and work, and the Lucas (1988) model of human capital externalities. The evidence points to the paramount importance of human capital in accounting for regional differences in development, but also suggests from model estimation and calibration that entrepreneurial inputs and human capital externalities are essential for understanding the data.
Keywords: Human Capital; Regional Development; Productivity; Education; Entrepreneurship
JEL Codes: L26; O11; O43; O47; R11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Human Capital (Education) (J24) | Regional Income (R11) |
| Human Capital (Education) (J24) | Productivity of Regional Establishments (D20) |
| Entrepreneurial Education (L26) | Productivity Differences Across Regions (O49) |
| Human Capital Externalities (J24) | Productivity Differences Across Regions (O49) |
| Human Capital (Education) (J24) | Productivity (Direct and External Channels) (O49) |
| Higher Educational Attainment (I23) | Higher Income Levels (J31) |
| Cultural and Institutional Factors (O43) | Regional Economic Disparities (R11) |
| Geography and Natural Resources (Q39) | Regional Economic Disparities (R11) |