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  • P-ISSN 2586-2995
  • E-ISSN 2586-4130
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KDI Journal of Economic Policy. Vol. 38, No. 4, December 2016, pp. 77-94

https://doi.org/10.23895/kdijep.2016.38.4.77

× KDI Open Access is a program of fully open access journals to facilitate the widest possible dissemination of high-quality research. All research articles published in KDI JEP are immediately, permanently and freely available online for everyone to read, download and share in terms of the Creative Commons Attribution 4.0 International License.

How Large are Local Human Capital Spillovers?: Evidence from Korea

WOO RAM PARK

Author & Article History

Manuscript received 17 May 2016; revision received 25 May 2016; accepted 30 September 2016.

Abstract

This paper examines the empirical magnitude of local human capital spillovers in Korea during the 1980s and mid-1990s. Local human capital spillovers exists if plants in regions with a higher level of human capital can produce more given their own amount of input (Moretti 2004c). In particular, this paper explores an educational reform in South Korea which exogenously induced a large amount of variation in regional human capital levels. Using annually collected plant level data, I explore the effect of changes in the regional human capital levels induced by this reform on plant productivity in Korea. My results suggest that this effect is limited. I find a positive correlation between a regional level of human capital and plant productivity. However, after further addressing endogeneity using an instrumental variable, the effect of the overall regional human capital level on productivity decreases and becomes statistically insignificant.

Keywords

Local Human Capital Spillovers, Plant Productivity, Instrumental Variable, College Education, South Korea

JEL Code

J24, I20, O40

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