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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Mendola, Mariapia / Requate, Till / Schirle, Tammy / de Vries, Frans / Zulehner, Christine

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1935-1682
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Volume 3, Issue 1 (Dec 2003)

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Volume 1 (2001)

Spillovers from Local Market Human Capital and the Spatial Distribution of Productivity in Malaysia

Timothy G. Conley / Fredrick Flyer / Grace R Tsiang
Published Online: 2003-12-24 | DOI: https://doi.org/10.2202/1538-0637.1229

Abstract

This paper examines whether spillovers from local market human capital are important in explaining the distribution of productivity across Malaysia. We develop an empirical method for describing local human capital distributions based on the idea that spillovers are limited in scope by costs of interaction or economic distance between agents. We use estimates of the economic distance between agents to construct measures of local market human capital based on schooling rates of the population within a given radius. These measures are then used in estimating equations obtained from a simple local public goods model. Our regressions are estimated using spatial GMM, allowing for general spatial correlation across observations as a function of economic distance. We find positive wage and rent differentials associated with local human capital, evidence consistent with productive human capital spillovers. Our results for rent differentials obtain with two distinct human capital measures; however, those for wage differentials depend on the human capital measure used.

Keywords: Human Capital Spillovers; Local Public Goods; Spatial GMM

About the article

Published Online: 2003-12-24


Citation Information: Advances in Economic Analysis & Policy, ISSN (Online) 1538-0637, DOI: https://doi.org/10.2202/1538-0637.1229.

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