Human Capital Convergence in Greece: A Panel Data Analysis
Pp. 141-159 (19)
George L. Liaskos and Christos T. Papadas
The neoclassical growth model has been supported by a large amount of regional and cross-country
studies providing evidence of β-convergence. Nevertheless, it faces theoretical and empirical challenges which are
still the subject of research on the dynamics of growth. Consideration of human capital accumulation has
strengthened the theoretical foundations of the model, especially its open economy version. It has also improved the
explanatory power of the model and its usefulness in quantitative analysis. Human capital accumulation accounts for
that part of observed per capita income and output disparities, not explained adequately by the initial approach.
Newer versions of neoclassical growth modeling imply clearly that the process of growth and convergence depends
heavily on human capital accumulation and convergence. This study investigates regional human capital
convergence in Greece during the period 1971-2001, for the census years of which necessary data are available.
Following the usual practice in the literature, human capital quality is expressed in terms of educational
achievement. Panel data econometric analysis is conducted using census year data for the Greek prefectures (NUTS
III areas). The existence of human capital β-convergence is examined. Changes in the distributions of educational
achievement, using different criteria, are also examined in order to see if actual convergence occurs. Results show
that both space and time effects are significant and so is the established conditional -convergence. Nevertheless,
actual convergence is not achieved over the examined period and the dispersion of the observed human capital
distributions has been increasing.
Agricultural University of Athens, Agricultural University of Athens