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

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  • Conley Timothy G.

    (University of Chicago, GSB)

  • Flyer Fredrick

    (Lexecon, Inc.)

  • Tsiang Grace R

    (University of Chicago)

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.

Suggested Citation

  • Conley Timothy G. & Flyer Fredrick & Tsiang Grace R, 2003. "Spillovers from Local Market Human Capital and the Spatial Distribution of Productivity in Malaysia," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(1), pages 1-47, December.
    • Handle: RePEc:bpj:bejeap:v:advances.3:y:2003:i:1:n:5
    DOI: 10.2202/1538-0637.1229
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    1. National Research Council & Institute of Medicine Panel to review the National Children's Study Research Plan of which Allen Schirm is a member, "undated". "Small-Area Estimates of School-Age Children in Poverty: Interim Report 2, Evaluation of Revised 1993 County Estimates for Title I Allocations," Mathematica Policy Research Reports ea76dc09961d429593186b567, Mathematica Policy Research.
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    Cited by:

    1. Kyriakos Drivas & Claire Economidou & Konstantinos N. Konstantakis & Panayotis G. Michaelides, 2022. "Technological Leaders, Laggards and Spillovers: A Network GVAR Analysis," Open Economies Review, Springer, vol. 33(2), pages 231-269, April.
    2. Gilles Duranton, 2007. "From cities to productivity and growth in developing countries," Working Papers tecipa-306, University of Toronto, Department of Economics.
    3. Conley, Timothy G. & Molinari, Francesca, 2007. "Spatial correlation robust inference with errors in location or distance," Journal of Econometrics, Elsevier, vol. 140(1), pages 76-96, September.
    4. repec:zbw:bofrdp:2015_027 is not listed on IDEAS
    5. Gilles Duranton, 2015. "Growing through Cities in Developing Countries," The World Bank Research Observer, World Bank, vol. 30(1), pages 39-73.
    6. Véronique Gille, 2012. "Education spillovers: empirical evidence in rural India," Indian Growth and Development Review, Emerald Group Publishing Limited, vol. 5(1), pages 4-24, April.
    7. Cem Ertur & Julie Le Gallo & Catherine Baumont, 2006. "The European Regional Convergence Process, 1980-1995: Do Spatial Regimes and Spatial Dependence Matter?," International Regional Science Review, , vol. 29(1), pages 3-34, January.
    8. Carlino, Gerald & Kerr, William R., 2015. "Agglomeration and Innovation," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 349-404, Elsevier.
    9. Puneet Manchanda & Ying Xie & Nara Youn, 2008. "The Role of Targeted Communication and Contagion in Product Adoption," Marketing Science, INFORMS, vol. 27(6), pages 961-976, 11-12.
    10. Ottaviano, Gianmarco I.P. & Pinelli, Dino, 2006. "Market potential and productivity: Evidence from Finnish regions," Regional Science and Urban Economics, Elsevier, vol. 36(5), pages 636-657, September.
    11. repec:bof:bofrdp:urn:nbn:fi:bof-201512111472 is not listed on IDEAS
    12. Im, Hyun Joong & Shon, Janghoon, 2019. "The effect of technological imitation on corporate innovation: Evidence from US patent data," Research Policy, Elsevier, vol. 48(9), pages 1-1.
    13. Gilles Duranton, 2008. "Viewpoint: From cities to productivity and growth in developing countries," Canadian Journal of Economics, Canadian Economics Association, vol. 41(3), pages 689-736, August.
    14. Carlino, Gerald & Kerr, William R., 2015. "Agglomeration and Innovation," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 349-404, Elsevier.
    15. Antonio Ciccone & Giovanni Peri, 2006. "Identifying Human-Capital Externalities: Theory with Applications," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(2), pages 381-412.
    16. Bořek Vašíček, 2008. "Prostorová ekonomie a prostorové externality: Přehled teorie a empirické evidence [Spatial economics and spatial externalities: A survey of theory and emprics]," Politická ekonomie, Prague University of Economics and Business, vol. 2008(5), pages 684-708.
    17. Thomas Kemeny, 2012. "Cultural Diversity, Institutions, and Urban Economic Performance," Environment and Planning A, , vol. 44(9), pages 2134-2152, September.
    18. Mariana Pereira-López & Isidro Soloaga, 2015. "External returns to higher education in Mexico 2000-2010," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(1), pages 1-34, May.
    19. Buzard, Kristy & Carlino, Gerald A. & Hunt, Robert M. & Carr, Jake K. & Smith, Tony E., 2020. "Localized knowledge spillovers: Evidence from the spatial clustering of R&D labs and patent citations," Regional Science and Urban Economics, Elsevier, vol. 81(C).
    20. Manuel Hidalgo-Pérez & Walter García-Fontes, 2014. "Estimating Human Capital Externalities: The Case of the Spanish Provinces, 1995-2010," Working Papers 14.06, Universidad Pablo de Olavide, Department of Economics.
    21. repec:zbw:bofrdp:urn:nbn:fi:bof-201512111472 is not listed on IDEAS
    22. Isacsson, Gunnar, 2005. "External effects of education on earnings: Swedish evidence using matched employee-establishment data," Working Paper Series 2005:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    23. Miki Malul, 2012. "A Dynamic Brain Drain in Peripheral Regions," ERSA conference papers ersa12p230, European Regional Science Association.

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