Human Capital, Geographical location and Policy Implications: The case of Romania

This paper looks at the link between human capital and geographical location for the Romanian regions based on the theoretical model developed in Redding and Schott ´s (2003) paper. Using 2006 data on the different educational attainment levels for the 42 Romanian regions, it identifies that the percentage of individuals with medium and high educational levels is affected positively by the regions ´ market access. Doubling market access would increase the percentage of individuals with medium and high educational levels between 22-25%. Moreover the econometric results show that between 45% and 59% of the spatial variation in human capital levels is explained by the market access variable. Some policy implications to overcome the costs remoteness imposes on human capital accumulation in Romania are also drawn.

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