Skip to main content

Advertisement

SpringerLink
Log in

Contributions of human capital investment policy to regional economic growth: an interregional CGE model approach

  • Special Issue Paper
  • Published:
The Annals of Regional Science Aims and scope Submit manuscript

Abstract

The purpose of this paper is to examine the regional impact of educational investment policies on migration and economic growth utilizing an interregional computable general equilibrium (ICGE) model with a human capital module. The CGE model is developed for three industrial sectors of two regions in South Korea, specifying the behaviors of the following economic agents: six producers, two regional households, two regional governments, a national (central) government, and the rest of the world. The model primarily focuses on structural linkages among migration, university education, labor productivity, and human capital formation in the short run and long run. Our paper demonstrates that the impact of the human capital investment on GRP growth was higher for the 30s age cohort than for any other age cohort, and this holds for both the Seoul Metropolitan Area (SMA) and the rest of Korea (ROK). With the aim of reducing regional disparity and of redistributing concentrated populations, the national government’s human capital investment policy should focus on local job training programs with the target population of the 30s age cohort in the ROK.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. The Lisbon strategy is an economic development plan to make the EU “the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion” by 2010.

  2. We assume there are two regions, representing a single representative agent for each region (SMA and ROK). Therefore, there are two households to avoid a computational difficulty in finding an optimal solution. If the ICGEP model would be composed of 16 households (eight age cohorts by two regions), it could not identify optimal solution due to a computational issue.

  3. This is quite distinct from other CGE models.

  4. The wage variable has to be used as a proxy one for the consumption power instead of total income because of statistical significance and data limitations by age cohort.

References

  • Acs Z, Audretsch D, Braunerhjelm P, Carlsson B (2004) The missing link: the knowledge filter and entrepreneurship in endogenous growth. CEPR Discussion Paper No. 4783

  • Adelman I, Robinson S (1978) Income distribution policy in developing countries: a case study of Korea. Stanford University Press, Stanford

    Google Scholar 

  • Barro RJ, Sala-i-Martin X (1995) Economic growth. McGraw-Hill, New York

    Google Scholar 

  • Berry CR, Glaeser EL (2005) The divergence of human capital levels across cities. Pap Reg Sci 84(3):407–444

    Article  Google Scholar 

  • Bilbao-Osorio B, Rodriguez-Pose A (2004) From R&D to innovation and economic growth in the EU. Growth Change 35(4):434–455

    Article  Google Scholar 

  • Blackburn ML (2009) Internal migration and the earnings of married couples in the United States. J Econ Geogr 10(1):87–111

    Article  Google Scholar 

  • Choi K, Cho D (2015) An effect analysis of regional research and development support policies: focused on Gyeongbuk province in Korea. Int J Urban Sci. doi:10.1080/12265934.2015.1043326

  • Costa DL, Kahn ME (2000) Power couples: changes in the locational choice of the college educated, 1940–1990. Q J Econ 115(4):1287–1315

    Article  Google Scholar 

  • Devarajan S, Go DS (1998) The simplest dynamic general-equilibrium model of an open economy. J Policy Model 20(6):677–714

    Article  Google Scholar 

  • Diao X, Elbasha EH, Roe TL, Yeldan AE (1996) A dynamic CGE model: an application of R&D-based endogenous growth model theory (No. 7461). University of Minnesota, Economic Development Center

  • Fagerberg J (1988) Why growth rates differ. In: Dosi G, Freeman C, Nelson R, Silverberg C, Soete L (eds) Technical change and economic theory. Pinter Publishers, London, pp 432–457

    Google Scholar 

  • Faggian A, McCann P (2009) Human capital, graduate migration and innovation in British Regions. Camb J Econ 33:317–333

    Article  Google Scholar 

  • Faggian A, McCann P, Sheppard S (2006) An analysis of ethnic differences in UK graduate migration behaviour. Ann Reg Sci 40(2):461–471

    Article  Google Scholar 

  • Faggian A, McCann P, Sheppard S (2007) Some evidence that women are more mobile than men: gender differences in UK graduate migration behavior. J Reg Sci 47(3):517–539

    Article  Google Scholar 

  • Gordon RH, Bovenberg AL (1996) Why is capital so immobile internationally? Possible explanations and implications for capital income taxation. Am Econ Rev 86(5):1057–1075

    Google Scholar 

  • Ham JC, Li X, Reagan PB (2011) Matching and semi-parametric IV estimation, a distance-based measure of migration, and the wages of young men. J Econom 161(2):208–227

    Article  Google Scholar 

  • Harris JR, Todaro MP (1970) Migration, unemployment and development: a two-sector analysis. Am Econ Rev 60(1):126–142

  • Hewings GJ, Kim E (2015) Demographic challenges to regional development. In: Nijkamp P, Rose A, Kourtit K (eds) Regional science matters. Springer, Switzerland, pp 187–219

  • Jorgenson DW, Wilcoxen PJ (1991) Intertemporal general equilibrium modeling of US environmental regulation. J Policy Model 12(4):715–744

    Article  Google Scholar 

  • Kaldor N (1970) The case for regional policies. Scott J Polit Econ 17(3):337–348

    Article  Google Scholar 

  • Kim TJ, Hewings GJ (2013) Endogenous growth in an aging economy: evidence and policy measures. Ann Reg Sci 50(3):705–730

    Article  Google Scholar 

  • Lee S-K, Kim E (2014) The effects of highway investments on production costs in the Korean manufacturing sector. Int J Urban Sci. doi:10.1080/12265934.2014.980301

  • Lucas RE (1988) On the mechanics of economic development. J Monet Econ 22(3):3–42

    Article  Google Scholar 

  • Mathur VK (1999) Human capital-based strategy for regional economic development. Econ Dev Q 13(3):203–216

    Article  Google Scholar 

  • Mankiw G, Weil DN (1989) The baby boom, the baby bust, and the housing market. Reg Sci Urban Econ 19:235–258

    Article  Google Scholar 

  • McKibbin WJ (1993) Integrating macroeconomic and multi-sector computable general equilibrium models (No. 100). Brookings Institution

  • Mercenier J (1995) Nonuniqueness of solutions in applied general equilibrium models with scale economies and imperfect competition. Econ Theory 6(1):161–177

    Article  Google Scholar 

  • Nikamp P, Poot J (1998) Spatial perspectives on new theories of economic growth. Ann Reg Sci 32(1):7–37

    Article  Google Scholar 

  • Plane DA (1993) Demographic influences on migration. Reg Stud 27(4):375–383

    Article  Google Scholar 

  • Plane DA, Jurjevich JR (2009) Ties that no longer bind? The patterns and repercussions of age-articulated migration. Prof Geogr 61(1):4–20

    Article  Google Scholar 

  • Plane DA, Rogerson PA (1991) Tracking the baby boom, the baby bust, and the echo generations: how age composition regulates US migration. Prof Geogr 43(4):416–430

    Article  Google Scholar 

  • Robinson S (1989) Multisectoral models. In: Chenery H, Srinivasan TN (eds) Handbook of development economics. Elsevier, North-Holland, Amsterdam, pp 885–947

  • Rodriguez-Pose A (1999) Innovation prone and innovation averse societies: economic performance in Europe. Growth Change 30(1):75–105

    Article  Google Scholar 

  • Rogers A, Raquillet R, Castro LJ (1978) Model migration schedules and their applications. Environ Plan A 10(5):475–502

    Article  Google Scholar 

  • Rogerson PA (1987) Changes in US national mobility levels. Prof Geogr 39(3):344–351

    Article  Google Scholar 

  • Romer PM (1990) Endogenous technological change. J Polit Econ 98(5.2):S71–S102

    Article  Google Scholar 

  • Schachter J, Franklin RS, Perry MJ (2003) Migration and geographic mobility in metropolitan and nonmetropolitan America, 1995 to 2000. US Department of Commerce. Economics and Statistics Administration, US Census Bureau, Washington

    Google Scholar 

  • Sjaastad LA (1962) The costs and returns of human migration. J Polit Econ 80–93

  • Solow RM (1956) A contribution to the theory of economic growth. Q J Econ 70(1):65–94

    Article  Google Scholar 

  • Sterlacchini A (2008) R&D, higher education and regional growth: uneven linkages among European regions. Res Policy 37(6–7):1096–1107

    Article  Google Scholar 

  • Swan TW (1956) Economic growth and capital accumulation. Econ Rec 32(2):334–361

    Article  Google Scholar 

  • Van Dijk J, Folmer H, Herzog HW, Schlottmann AM (1989) Migration and labour market adjustment. Kluwer, Dordrecht

    Book  Google Scholar 

  • Waldorf BS (2009) Is human capital accumulation a self-propelling process? Comparing educational attainment levels of movers and stayers. Ann Reg Sci 43(2):323–344

    Article  Google Scholar 

  • Yankow JJ (2003) Migration, Job Change, and Wage Growth: A New Perspective on the Pecuniary Return to Geographic Mobility. J Reg Sci 43(3):483–516

  • Yezer AMJ, Thurston L (1976) Migration patterns and income change: implications for the human capital approach to migration. South Econ J 42(4):693–702

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of Environmental and Public Affairs, Greenspun College of Urban Affairs, University of Nevada, Las Vegas, 4505 S. Maryland Parkway, Mailbox #4030, Las Vegas, NV, 89154-4030, USA

    Jaewon Lim

  2. Office of the President, Republic of Korea, 1 Cheongwadae-ro, Jongno-gu, Seoul, 110-820, Republic of Korea

    Changkeun Lee

  3. Department of Agricultural Economics and Rural Development and Institute of Agricultural and Life Sciences, Seoul National University, 1 Gwanakro Gwanak-gu, Seoul, 151-921, Republic of Korea

    Euijune Kim

Authors
  1. Jaewon Lim
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Changkeun Lee
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Euijune Kim
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Changkeun Lee.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Lim, J., Lee, C. & Kim, E. Contributions of human capital investment policy to regional economic growth: an interregional CGE model approach. Ann Reg Sci 55, 269–287 (2015). https://doi.org/10.1007/s00168-015-0690-0

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s00168-015-0690-0

JEL Classification

Search

Navigation