Knowledge Capital and Aggregate Income Differences: Development Accounting for US States
American Economic Journal: Macroeconomics
vol. 9,
no. 4, October 2017
(pp. 184-224)
(Complimentary)
Abstract
Improvement in human capital is often presumed to be important for state economic development, but little research links better education to state incomes. We develop detailed measures of worker skills in each state that incorporate cognitive skills from state- and country-of-origin achievement tests. These new measures of knowledge capital permit development accounting analyses calibrated with standard production parameters. Differences in knowledge capital account for 20-30 percent of the state variation in per capita GDP, with roughly even contributions by school attainment and cognitive skills. Similar results emerge from growth accounting analyses. These estimates support school improvement as a strategy for state economic development.Citation
Hanushek, Eric A., Jens Ruhose, and Ludger Woessmann. 2017. "Knowledge Capital and Aggregate Income Differences: Development Accounting for US States." American Economic Journal: Macroeconomics, 9 (4): 184-224. DOI: 10.1257/mac.20160255Additional Materials
JEL Classification
- I25 Education and Economic Development
- I26 Returns to Education
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- R11 Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
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