Economic Geography, Growth Dynamics and Human Capital Accumulation in Turkey: Evidence from Regional and Micro Data

No 1233, Working Papers from Economic Research Forum

Abstract: This study explores the endogenous relationship among market access, wages and human capital accumulation in Turkey. Our first set of analyses tests the impact of market access on human capital development using regional data at the NUTS III level. Results, robust to the inclusion of spatial spillovers, regional structural differences in production, possible endogeneity issues and the unobserved regional heterogeneities, validate that regions with better access to markets are the ones that accumulate more human capital in Turkey. Our second set of analyses aims to explore the background of human capital accumulation by using individual level data, which allows us to combine market accessibility, returns to education (wages) and human capital development. Remarkably, once we include wages and treat it as endogenous, we find evidence that the impact of market access on human capital development diminishes. Overall, the findings of this study validate that background of the NEG model does not work in line with the expectations. Rather the influence of geographical proximity on wages and individual’s decision on human capital investment are not identical.

Pages: 47 pages
Date: 2018-10-10, Revised 2018-10-10
New Economics Papers: this item is included in nep-ara, nep-cwa, nep-geo, nep-gro and nep-ure
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