ENDOGENOUS GROWTH, HUMAN CAPITAL, AND INDUSTRY WAGES |
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Authors: | Rudolph Winter-Ebmer |
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Affiliation: | University of Linz, Austria and Centre for Economic Policy Research, London |
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Abstract: | Lucas' model (1988) of external effects of human capital formation is taken as a starting point for looking at the impact of human capital on wages. Even though most empirical tests of New Growth Theory are made using time-series and cross-sections of countries — with good reasons — I suggest a microeconometric approach in order to test Lucas' basic assumption of external effects of human capital. As a first step, internal effects of education are filtered out by using wage functions for individuals in Austria. In the second step, resulting industry wage premiums are regressed on industry-specific characteristics and, above all, on average human capital in the industry to account for external effects of human capital. |
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