Regional Human Capital and University Orientation: A case study on Spain
This paper analyzes the determinants of human capital (HC) endowment in Spanish regions. To do so we elaborate an empirical analysis grounded in the interface of two consolidated areas of research. On the one hand is the literature on economic geography that articulates in great detail the effect of local characteristics on the performance of a regional economy. At the same time, we argue, the traditional measures of human capital in these studies mostly focus on the supply-side (i.e. total number of graduates) thus neglecting altogether the dynamics of local labour markets. On the other hand the labour economics literature proposes a more nuanced approach based on the study of changes in the relative demand of workers’ skill. While this is a more direct measure of the transformations within labour markets, it is rarely used to capture geographical differences across regions. We bring together these two strands of literature to analyse the interplay between demand and supply of skills across 17 regions in Spain. Our analysis captures the effect of regional factor bias by using a novel indicator of university mission engagement as well as various local techno-economic characteristics. The main finding is that university orientation bears a differential effect on local labour markets. Accordingly we identify three groups: research-oriented regions (leaders); industry intensive regions (followers) and a group of backward regions (laggards).
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