Productivity growth and convergence: a stochastic frontier analysis

Moura e Sa Cardoso, C. and Ravishankar, G. 2015. Productivity growth and convergence: a stochastic frontier analysis. Journal of Economic Studies. 42 (2), pp. 224-236.

TitleProductivity growth and convergence: a stochastic frontier analysis
TypeJournal article
AuthorsMoura e Sa Cardoso, C. and Ravishankar, G.

– The purpose of this paper is to assess the effect of human capital development on regional productivity growth and convergence in the Spanish provinces over the period 1991-2006.

– The stochastic frontier analysis (SFA) methodology is used to estimate production inefficiencies. This approach enables the assessment of the degree to which a given region’s observed output deviates from the maximal possible. Therefore, the resulting region specific productive efficiencies are modelled as outcomes of the level of human capital. A β-convergence equation for the regional efficiency levels is also estimated to detect any signs of regional catching-up.

– The results show that increasing levels of human capital development are associated with lower regional inefficiency. All levels of education contributed to reduce the inefficiency levels, however, secondary schooling played a stronger role than primary and even higher education. There is also evidence of regional convergence towards the best practice frontier through a process that is beneficially aided by human capital development.

– The paper combines the use of the SFA to study the effect of human capital on regional productivity with the estimation of a β-convergence equation for the obtained regional efficiency levels.

KeywordsSFA, Human capital, Regional growth
JournalJournal of Economic Studies
Journal citation42 (2), pp. 224-236
Accepted author manuscript
Digital Object Identifier (DOI)
Publication dates
Published17 Apr 2015

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