Human Capital as a Binding Constraint to Economic Growth: The Case of Macedonia

Lazarov, Darko and Petreski, Goce (2016) Human Capital as a Binding Constraint to Economic Growth: The Case of Macedonia. Croatian Economic Survey, 18 (1). pp. 35-70. ISSN 1330-4860 online / 1846-3878

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The main objective of the paper is to explore the assumption if the lack of skilled and well-educated workforce (human capital) holds a potential of a binding constraint to economic growth of the Macedonian economy. Not neglecting growth econometrics’ insights for the investigation of the relationship between human capital and economic growth, the work is primarily based on a growth diagnostic approach. The empirical techniques used in this paper are: growth accounting decomposition production method; macro and micro assessment of the return rate on investment in human capital; and, comparative benchmark analysis concerns with regard to unemployment distribution according to education and age structure and companies’ perceptions about the quality of workforce. The estimated results indicate an important contribution of human capital to economic growth (its relative contribution in terms of growth rate composition is approximately 22 percent). The macro and micro assessment of the rate of return on investment in human capital shows that the rate of return to higher education is significantly superior to corresponding returns to secondary education. Finally, the international benchmark analysis helps in comparative human capital impact analysis (educational structure of labor force in the wider region). Predominantly, it is based on educational structure, unemployment distribution and the companies’ perception about the quality of the workforce. Keywords: economic growth, human capital, growth accounting, comparative analysis, Macedonia JEL classification: O47, O3, O32, O38

Item Type: Article
Subjects: Social Sciences > Economics and business
Divisions: Faculty of Economics
Depositing User: Darko Lazarov
Date Deposited: 16 Feb 2017 12:11
Last Modified: 16 Feb 2017 12:11

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