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A Reevaluation of the Effect of Human Capital Accumulation on Economic Growth Using Natural Disasters as an Instrument

Author

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  • Hideki Toya

    (Faculty of Economics, Nagoya City University, Yamanohata-1, Mizuho-cho, Mizuho-ku, Nagoya 467-8501, Japan.)

  • Mark Skidmore

    (Agricultural, Food and Resource Economics, Michigan State University, 208 Agriculture Hall, East Lansing, MI 48824, USA.)

  • Raymond Robertson

    (Department of Economics, Macalester College, 1600 Grand Avenue, Saint Paul, MN 55105-1899.)

Abstract
Theoretic growth models and microeconomic evidence suggest that human capital accumulation is an important determinant of per capita income growth. However, early macroeconomic studies found a weak relationship between growth and human capital accumulation. While recent studies addressing outliers, measurement errors, and specification error are beginning to show larger positive effects, human capital endogeneity has received little attention. This article suggests that endogeneity is significant and finds that natural disasters are a good instrument for changes in schooling. Our resulting instrumental variable estimates are larger than our OLS estimates and are generally larger than those in previous studies.

Suggested Citation

  • Hideki Toya & Mark Skidmore & Raymond Robertson, 2010. "A Reevaluation of the Effect of Human Capital Accumulation on Economic Growth Using Natural Disasters as an Instrument," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 36(1), pages 120-137.
    • Handle: RePEc:pal:easeco:v:36:y:2010:i:1:p:120-137
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    3. Laura REESE, 2012. "CREATIVE CLASS OR PROCREATIVE CLASS: IMPLICATIONS FOR LOCAL ECONoMIC DEVELOPMENT POLICY," Theoretical and Empirical Researches in Urban Management, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 7(1), pages 5-26, February.
    4. Fabrizio Carmignani & Abdur Chowdhury, 2010. "Why are natural resources a curse in Africa, but not elsewhere?," Discussion Papers Series 406, School of Economics, University of Queensland, Australia.
    5. Rahman, Muhammad Habibur, 2018. "Earthquakes don’t kill, built environment does: Evidence from cross-country data," Economic Modelling, Elsevier, vol. 70(C), pages 458-468.
    6. Muhammad Habibur Rahman & Nejat Anbarci & Prasad Sankar Bhattacharya & Mehmet Ali Ulubaşoğlu, 2017. "The Shocking Origins of Political Transitions: Evidence from Earthquakes," Southern Economic Journal, John Wiley & Sons, vol. 83(3), pages 796-823, January.
    7. Hideki Toya & Mark Skidmore, 2014. "Do Natural Disasters Enhance Societal Trust?," Kyklos, Wiley Blackwell, vol. 67(2), pages 255-279, May.
    8. Tanner CONNORS & Laura A. REESE & Mark SKIDMORE, 2020. "The Ruralization Of Detroit? Implications For Economic Redevelopment Policy," Theoretical and Empirical Researches in Urban Management, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 15(3), pages 29-48, August.
    9. Aweng Peter Majok Garang & Hatice Erkekoglu, 2021. "Convergence Triggers in Africa: Evidence from Convergence Clubs and Panel Models," South African Journal of Economics, Economic Society of South Africa, vol. 89(2), pages 218-245, June.
    10. Laura A. Reese & Minting Ye, 2011. "Policy Versus Place Luck: Achieving Local Economic Prosperity," Economic Development Quarterly, , vol. 25(3), pages 221-236, August.
    11. Ward, Michael R., 2018. "“Cutting class to play video games”," Information Economics and Policy, Elsevier, vol. 42(C), pages 11-19.

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