The impact of human capital on regional labor productivity in Europe

  • Manfred M. FischerEmail author
  • Monika Bartkowska
  • Aleksandra Riedl
  • Sascha Sardadvar
  • Andrea Kunnert
Original Paper


The focus of this paper is on the role of human capital in explaining labor productivity variation among 198 European regions within a regression framework. Human capital is measured in terms of educational attainment using data for the active population aged 15 years and older that obtained tertiary education. The existence of unobserved human capital excluded from the model but likely to exhibit spatial dependence and non-zero covariance with the educational attainment variable, motivates the use of a spatial regression relationship that is known as spatial Durbin model.

The paper outlines the model along with the associated methodology for estimating the impact of human capital on regional labor productivity, based upon LeSage and Pace’s approach to calculating scalar summary measures of impacts. A simulation approach with 10,000 draws is used to produce an empirical distribution of the model parameters needed for computing measures of dispersion for the impact estimates. The results obtained shed some interesting light on the contribution of human capital to labor productivity differences among European regions. A ceteris paribus increase in the level of human capital is found to have a significant and positive direct impact. But this positive direct impact is offset by a significant and negative indirect (spillover) impact leading to a total impact that is not significantly different from zero.


Human capital Labor productivity Spatial Durbin model Spatial externalities European regions 

JEL Classification

C21 O18 O47 O52 R11 


  1. Abreu, M., de Groot, H.L.F., Florax, R.J.G.M.: Space and growth: a survey of empirical evidence and methods. Rég. Dév. 21, 12–43 (2005) Google Scholar
  2. Anselin, L.: Spatial Econometrics: Methods and Models. Kluwer, Dordrecht (1988) Google Scholar
  3. Anselin, L., Bera, A.K.: Spatial dependence in linear regression models with an introduction to spatial econometrics. In: Ullah, A., Giles, D.E.A. (eds.) Handbook of Applied Economic Statistics, pp. 237–289. Marcel Dekker, New York (1998) Google Scholar
  4. Anselin, L., LeGallo, J.: Interpolation of air quality measures in hedonic house price models: spatial aspects. Spat. Econ. Anal. 1(1), 31–52 (2006) CrossRefGoogle Scholar
  5. Benhabib, J., Spiegel, M.M.: The role of human capital in economic development. Evidence from aggregate cross-country data. J. Monet. Econ. 34, 143–173 (1994) CrossRefGoogle Scholar
  6. Burridge, J.: A note on maximum likelihood estimation for regression models using grouped data. J. R. Stat. Soc. B 43(1), 41–45 (1981) Google Scholar
  7. Cheshire, P.C., Malecki, E.J.: Growth, development, and innovation: a look backward and forward. Pap. Reg. Sci. 83(1), 249–267 (2004) CrossRefGoogle Scholar
  8. Cliff, A.D., Ord, J.K.: Spatial Processes: Models and Applications. Pion, London (1981) Google Scholar
  9. Fingleton, B., López-Bazo, E.: Empirical growth models with spatial effects. Pap. Reg. Sci. 85(2), 177–198 (2006) CrossRefGoogle Scholar
  10. Fischer, M.M., Stirböck, C.: Pan-European regional income growth and club-convergence. Ann. Reg. Sci. 40(4), 693–721 (2006) CrossRefGoogle Scholar
  11. Fischer, M.M., Scherngell, T., Reismann, M.: Knowledge spillovers and total factor productivity. Evidence using a spatial panel data model. Geogr. Anal. 41(2), 204–220 (2009) CrossRefGoogle Scholar
  12. Griffith, D.A.: Some guidelines for specifying the geographic weights matrix contained in spatial statistics models. In: Arlinghaus, S.L., Griffith, D.A., Arlinghaus, W.C., Drake, W.D., Nystrom, J.D. (eds.) Practical Handbook of Spatial Analysis, pp. 65–82. CRC Press, Boca Raton (1995) Google Scholar
  13. Griliches, Z.: R&D, Education, and Productivity. A Retrospective. Harvard University Press, Cambridge (2000) Google Scholar
  14. Kelejian, H.H., Tavlas, G.S., Hondronyiannis, G.: A spatial modeling approach to contagion among emerging economies. Open Econ. Rev. 17(4/5), 423–441 (2006) CrossRefGoogle Scholar
  15. LeSage, J.P., Fischer, M.M.: Spatial growth regressions: model specification, estimation and interpretation. Spat. Econ. Anal. 3(3), 275–304 (2008) CrossRefGoogle Scholar
  16. LeSage, J.P., Fischer, M.M.: The impact of knowledge capital on regional total factor productivity (2009). Available at SSRN:
  17. LeSage, J.P., Pace, R.K.: Introduction to Spatial Econometrics. CRC Press, Boca Raton (2009) Google Scholar
  18. Mur, J., Angulo, A.: The spatial Durbin model and the common factor tests. Spat. Econ. Anal. 1(2), 207–226 (2006) CrossRefGoogle Scholar
  19. Ohmae, K.: The End of the Nation State: The Rise of Regional Economies. Free Press, New York (1995) Google Scholar
  20. Pritchett, L.: Where has all the education gone? World Bank Econ. Rev. 15(3), 367–391 (2001) CrossRefGoogle Scholar
  21. Storper, M.: The Regional World: Territorial Development in a Global Economy. Guilford Press, New York (1997) Google Scholar
  22. Temple, J.: A positive effect of human capital on growth. Econ. Lett. 65, 131–134 (1999) CrossRefGoogle Scholar

Copyright information

© Springer-Verlag 2009

Authors and Affiliations

  • Manfred M. Fischer
    • 1
    Email author
  • Monika Bartkowska
    • 1
  • Aleksandra Riedl
    • 1
  • Sascha Sardadvar
    • 1
  • Andrea Kunnert
    • 1
  1. 1.Institute for Economic Geography and GIScienceVienna University of Economics and BusinessViennaAustria

Personalised recommendations