Human capital quality and regional growth in Brazil

Purpose There are many studies that analyze the importance of education and human capital on regional economic growth. However, few are concerned with assessing the quality of human capital. This work aims to evaluate the importance of the quantity and quality of human capital for economic growth. It proposes an expansion of the Mankiw, Romer and Weil (1992) model, with the inclusion of the quality of human capital as a factor capable of stimulating the regional economy. Design/methodology/approach Using data from IBGE, RAIS, DENATRAN and ANATEL, we estimate a spatial panel model for the 558 Brazilian micro-regions for the period from 2009 to 2017, robust to heteroscedasticity and controlling for unobserved and time-constant individual heterogeneity. Findings All estimated coefficients follow the signs expected by the proposed model, and the results confirm the importance of human capital for economic growth, both in quantitative and qualitative aspects. Direct and indirect effects are found, suggesting that human capital is important for the region and its neighboring areas. Practical implications These results can be used by educational policymakers to prioritize investments in improving the quality of education. Originality/value The originality of this study is to analyze the impact of the quality of human capital on regional economic growth.