Diagnosing Human Capital as a Binding Constraint to Growth
Tests, Symptoms and Prescriptions

Proposes a framework to determine whether human capital investments are a priority to boost a country's growth strategy.

Miguel Angel Santos (Author), Farah Hani (Author)

9781108971591, Cambridge University Press

Paperback / softback, published 16 December 2021

75 pages
22.8 x 15.2 x 0.5 cm, 0.12 kg

The empirical literature on the contributions of human capital investments to economic growth shows mixed results. While evidence from OECD countries demonstrates that human capital accumulation is associated with growth accelerations, the substantial efforts of developing countries to improve access to and quality of education, as a means for skill accumulation, did not translate into higher income per capita. In this Element, we propose a framework, building on the principles of 'growth diagnostics', to enable practitioners to determine whether human capital investments are a priority for a country's growth strategy. We then discuss and exemplify different tests to diagnose human capital in a place, drawing on the Harvard Growth Lab's experience in different development context, and discuss various policy options to address skill shortages.

Introduction
1. What is Human Capital?
2. Testing for Human Capital as a Binding Constraint to Growth
3. From Diagnostic Symptoms to the Syndrome and Therapeutics
Conclusion
Appendix 1: Mincer Regression for Mexico and Chiapas
Appendix 2: Incorporating Quality in Mincer Regression
Appendix 3: Wage Premia by Industry and Occupation
Appendix 4: Industry Factor-Intensity and Relationship to Country Exports.

Subject Areas: Economics [KC]