Human Capital, Age Structure and Growth Fluctuation

Crespo Cuaresma, J. & Mishra, T. (2007). Human Capital, Age Structure and Growth Fluctuation. IIASA Interim Report. IIASA, Laxenburg, Austria: IR-07-031

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Abstract

This paper assesses empirically the relationship between GDP per capita growth fluctuations and the age structure and intensity of human capital across developed and developing countries. We estimate a spatial vector autoregressive model of income dynamics where the economic distance between countries is defined on their similarity in measures of human capital and its distribution across age groups. These distances are computed using a newly developed human capital data set. Spatial effects on growth volatility and complemetarity in national growth processes are explored with respect to the proposed distance metrics. Our results imply that significant growth interdependence based on human capital distances exists among countries, with highly non-linear effects.

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