Labor Productivity and Human Capital: An Interactive Model

Enis Begeç

doi:10.25229/beta.1675194

TR EN

Labor Productivity and Human Capital: An Interactive Model

Abstract

The primary objective of the paper is to examine the hypothesis that human capital affects labor productivity directly and indirectly. The paper investigates this relationship using data from 1991 to 2019 for BRICS-T countries, with panel fixed effects and panel random effects models. Moreover, the paper employs the standard error method to examine the marginal effects of trade openness, savings, labor market reforms, and information and communication technology on labor productivity. According to the analysis results, we find strong evidence supporting the hypothesis that human capital influences not only labor productivity directly but also indirectly. The marginal effects of all variables used in the study are also found to be statistically significant.

Keywords

Labor Productivity, Human Capital, Interactive Model, Labor Market Reforms, Information and Communication Technology

References

Abel, J. R., & Gabe, T. M. (2011). Human Capital and Economic Activity in Urban America. Regional Studies, 45(8), 1079-1090 https://doi.org/10.1080/00343401003713431
Anderson, T. W. (1951). Estimating Linear Restrictions on Regression Coefficients for Multivariate Normal Distributions. The Annals of Mathematical Statistics, 22(3), 327-351
Astriou, D., & Agiomirgianakis, G. M. (2001). Human Capital and Economic Growth Time Series Evidence from Greece. Journal of Policy Modeling, 23(5), 481-489. https://doi.org/10.1016/S0161-8938(01)00054-0
Awan, A. G. (2012). Diverging Trends of Human Capital in BRIC Countries. International Journal of Asian Social Science, 2(12), 2195-2219.
Azariadis, C., & Drazen, A. (1990). Threshold Externalities in Economic Development. The Quarterly Journal of Economics, 105(2), 501-526. https://doi.org/10.2307/2937797
Baharin, R., Aji, R. H. S., Yussof, I., & Saukani, N. M. (2020). Impact of Human Resource Investment on Labor Productivity in Indonesia. Iran Journal of Management Studies, 13(1), 139-164. https://doi.org/10.22059/ijms.2019.280284.673616
Baltagi, B. H., & Lee, Q. (1995). Testing AR(1) Against MA(1) Disturbances in an Error Component Model. Journal of Econometrics, 68(1), 133-151. https://doi.org/10.1016/0304-4076(94)01646-H
Baltagi, G. H. (2013). Econometric Analysis of Panel Data. John Wiley & Sons Chichester, Fifth Edition.
Barcenilla-Visús, S., & López-Pueyo, C. (2018). Inside Europe: Human Capital and Economic Growth Revisited. Empirica, 45(4), 821-847. https://doi.org/10.1007/s10663-017-9394-2
Becker, G. S. (1960). Underinvestment in College Education? The American Economic Review, 50(2), 346-354.

Becker, G. S. (1964). Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education. Chicago: University of Chicago Press, Third Edition.
Belorgey, N., Lecat, R., & Maury, T. P. (2006). Determinants of Productivity per Employee: An Empirical Estimation Using Panel Data. Economics Letters, 91(2), 153-157. https://doi.org/10.1016/j.econlet.2005.09.03
Benhabib, J., & Spiegel, N. M. (1994). The Role of Human Capital in Economic Development: Evidence from Aggregate Cross-Country Data. Journal of Monetary Economics, 34(2), 143-173. https://doi.org/10.1016/0304-3932(94)90047-7
Benos, N., & Zotou, S. (2014). Education and Economic Growth: A Meta-Regression Analysis. World Development, 64, 669-689. https://doi.org/10.1016/j.worlddev.2014.06.034
Benos, N., & Karagiannis, S. (2016). Do Education Quality and Spillovers Matter? Evidence on Human Capital and Productivity in Greece. Economic Modelling, 54, 563-573. https://doi.org/10.1016/j.econmod.2016.01.015
Bhargava, A., Franzini, L., & Narendranathan, W. (1982). Serial Correlation and Fixed Effects Model. Review of Economic Studies, 49(4), 533-549. https://doi.org/10.23072297285
Bloom, D. E., Sachs, J. D., Collier, P., & Udry, C. (1998). Geography, Demography, and Economic Growth in Africa. Brooking Papers on Economic Activity, 1998(2), 207-295.
Born, B., & Breitung, J. (2016). Testing for Serial Correlation in Fixed-Effects Panel Data Models. Econometric Reviews, 35(7), 1290-1316. https://doi.org/10.1080/07474938.2014.976524
Brambor, T., Clark, W. R., & Golder, M. (2006). Understanding Interaction Models: Improving Empirical Analyses. Political Analysis, 14(1), 63-82.
Breusch, T. S., & Pagan, A. R. (1980). The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics. The Review of Economic Studies, 47(1), 239-253. https://doi.org/10.2307/2297111
Bronzini, R., & Piselli, P. (2009). Determinants of Long-run Regional Productivity with Geographical Spillovers: The Role of R&D, Human Capital and Public Infrastructure. Regional Science and Urban Economics, 39(2), 187-199. https://doi.org/10.1016/j.regsciurbeco.2008.07.002
Choudhry, M. T. (2009). Determinants of Labor Productivity: An Empirical Investigation of Productivity Divergence. University of Groningen, The Netherlands.
Choudhry, M. T., Marelli, E., & Signorelli, M. (2016). Age Dependency and Labour Productivity Divergence. Applied Economics, 48(50), 4823-4845. https://doi.org/10.1080/00036846.2016.1167823
Cragg, J. G., & Donald, S. G. (1993). Testing Identifiability and Specification in Instrumental Variable Models. Econometrics Theory, 9(2), 222-240.
Collins, S. M., & Bosworth, B. P. (1996). Economic Growth in East Asia: Accumulation Versus Assimilation. Brookings Papers on Economic Activity, 1996(2), 135-203.
Delsen, L., & Schonewille, M. (1999). Human Capital and Labor Productivity, Integration of Institutions and Endogenous Growth. Paper for EALE Conference in Regensburg [Online] Available at: https://econwpa.ub.uni-muenchen.de/econwp/hew/papers/9908/9908001.pdf. [Accessed in November 2019]
Driscoll, J. C., & Kraay, A. C. (1998). Consistent Covariance Matrix Estimation with Spatially Dependent Panel Data. The Review of Economics and Statistics, 80(4), 549-560. https://doi.org/10.1162/003465398557825
Edwards, S. (1997). Openness, Productivity, and Growth: What Do We Really Know? NBER Working Paper 5978.
Freund, C., & Bolaky, B. (2008). Trade, Regulations, and Income. Journal of Development Economics, 87(2), 309-321. https://doi.org/10.1016/j.deveco.2007.11.003
Goldin, C., & Katz, L. (2008). The Race Between Education and Technology. MA: Harvard University Press, Cambridge.
Gust, C., & Marquez, J. (2002). International Comparisons of Productivity Growth: The Role of Information Technology and Regulatory Practices. International Finance Discussion Papers, 727, Board of Governors of the Federal Reserve System.
Hanushek, E. A., & Woessmann, L. (2008). Education Quality and Economic Growth. The World Bank, Washington, DC.
Hansen, L. P. (1982). Large Sample Properties of Generalized Method of Moments Estimators. Econometrica, 50(4), 1029-1054.
Hausman, J. (1978). Specification Tests in Econometrics. Econometrica, 46(6), 1251-1280. https://doi.org/10.2307/1913827
Hoechle, D. (2007). Robust Standard Errors for Panel Regressions with Cross-Sectional Dependence. The Stata Journal, 7(3), 281-312. https://doi.org/10.1177/1536867X0700700301
Khan, S. R., Shaw, W. D., & Hussain, F. (1991). Causality Between Literacy and Labor Productivity in Pakistan. Economics of Education Review, 10(3), 245-251. https://doi.org/10.1016/0272-7757(91)90047-S
Kleibergen, F., & Paap, R. (2006). Generalized Reduced Rank Tests Using The Singular Value Decomposition. Journal of Econometrics, 133(1), 97-126. https://doi.org/10.1016/j.jeconom.2005.02.011
Kosack, S., & Tobin, J. L. (2015). Which Countries’ Citizens are Better off With Trade? World Development, 76(12), 95-113. https://doi.org/10.1016/j.worlddev.2015.05.021
Kutan, A. M., & Yiğit, T. M. (2007). European Integration, Productivity Growth, and Real Convergence. European Economic Review, 51(6), 1370-1395. https://doi.org/10.1016/j.euroecorev.2006.11.001
Lucas, R. E. Jr. (1988). On The Mechanics of Economic Development. Journal of Monetary Economics, 22(1), 3-42. https://doi.org/10.1016/0304-3932(88)90168-7
Mankiw, N. G., Romer, D., & Weil, D. N. (1992). A Contribution to The Empirics of Economic Growth. The Quarterly Journal of Economics, 107(2), 407-437.
Papageorgiou, C. (2003). Distinguishing Between The Effects of Primary and Post-Primary Education on Economic Growth. Review of Development Economics, 7(4), 622-635. https://doi.org/10.1111/1467-9361.00213
Pereira, J., & Aubyn, M. S. (2009). What Level of Education Matters Most for Growth? Evidence From Portugal. Economics of Education Review, 28(1), 67-73. https://doi.org/10.1016/j.econedurev.2007.12.001
Pesaran, M. H. (2004). General Diagnostic Tests for Cross Section Dependence in Panels. Cambridge Working Papers in Economics, 0435, Faculty of Economics, University of Cambridge.
Pesaran, M. H. (2007). A Simple Panel Unit Root Test in the Presence of Cross-Section Dependency. Journal of Applied Econometric, 22(2), 265-312. https://doi.org/10.1002/jae.951
Pesaran, M. H., Ullah, A., & Yamagata, T. (2008). A Bias-Adjusted LM Test of Error Cross-Section Independence. Econometrics Journal, 11(1), 105-127. https://doi.org/10.1111/j.1368-423X.2007.00227.x
Petrakis, P. E., & Stamatakis, D. (2002). Growth and Educational Levels: A Comparative Analysis. Economics of Education Review, 21(5), 513-521. https://doi.org./10.1016/S0272-7757(01)00050-4
Romer, P. M. (1986). Increasing Returns and Long-run Growth. The Journal of Political Economy, 94(5), 1002-1037.
Sarı, R., & Soytaş, U. (2006). Income and Education in Turkey: A Multivariate Analysis. Education Economics, 14(2), 181-196. https://doi.org/10.1080/09645290600622921
Sargan, J. D. (1958). The Estimation of Economic Relationships Using Instrumental Variables. Econometrica, 26(3), 393-415.
Schultz, T. W. (1961). Investment in Human Capital. The American Economic Review, 51(1), 1-17.
Schultz, T. W. (1963). The Economic Value of Education. New York: Colombia University Press.
Solow, M.R. (1956). A Contribution to the Theory of Economic Growth. The Quarterly Journal of Economics, 70(1), 65-94.
Solow, M. R. (1957). Technical Change and The Aggregate Production Function. The Review of Economics and Statistics, 39(3), 312-320.
Swan, T. W. (1956). Economic Growth and Capital Accumulation. Economic Record, 32(2), 334-361. https://doi.org/10.1111/j.1475-4932.1956.tb00434.x
Tatoğlu, F. Y. (2018). Panel Veri Ekonometrisi Stata Uygulamalı. İstanbul: Beta Yayıncılık (Dördüncü Baskı).
Temple, J. (1999). A Positive Effect of Human Capital on Growth. Econometrics Letters, 65(1), 131-134. https://doi.org/10.1016/S0165-1765(99)00120-2
Tran, V. N., Alauddin, M., & Tran, V. Q. (2019). Labour Quality and Benefits Reaped from Global Economic Integration: An Application of Dynamic Panel SGMM Estimators. Economic Analysis and Policy, 63(3), 92-106. https://doi.org/10.1016/jeap.2019.04.014
Ursavaş, U. (2020). Total Factor Productivity Growth and Demographics: The Case of Turkey. Journal of Research in Economics, Politics & Finance, 5(1), 81-90. https://doi.org/10.30784/epfad.690256

Details

Primary Language

English

Subjects

Development Economics - Macro

Journal Section

Research Article

Authors

Enis Begeç ^*
0000-0002-7502-1944
Türkiye

Early Pub Date

October 20, 2025

Publication Date

October 29, 2025

Submission Date

April 13, 2025

Acceptance Date

September 5, 2025

Published in Issue

Year 2025 Volume: 10 Number: 3

DOI

https://doi.org/10.25229/beta.1675194

IZ

https://izlik.org/JA53YR58SR

APA

Begeç, E. (2025). Labor Productivity and Human Capital: An Interactive Model. Bulletin of Economic Theory and Analysis, 10(3), 1413-1439. https://doi.org/10.25229/beta.1675194

AMA

1.Begeç E. Labor Productivity and Human Capital: An Interactive Model. Beta. 2025;10(3):1413-1439. doi:10.25229/beta.1675194

Chicago

Begeç, Enis. 2025. “Labor Productivity and Human Capital: An Interactive Model”. Bulletin of Economic Theory and Analysis 10 (3): 1413-39. https://doi.org/10.25229/beta.1675194.

EndNote

Begeç E (October 1, 2025) Labor Productivity and Human Capital: An Interactive Model. Bulletin of Economic Theory and Analysis 10 3 1413–1439.

IEEE

[1]E. Begeç, “Labor Productivity and Human Capital: An Interactive Model”, Beta, vol. 10, no. 3, pp. 1413–1439, Oct. 2025, doi: 10.25229/beta.1675194.

ISNAD

Begeç, Enis. “Labor Productivity and Human Capital: An Interactive Model”. Bulletin of Economic Theory and Analysis 10/3 (October 1, 2025): 1413-1439. https://doi.org/10.25229/beta.1675194.

JAMA

1.Begeç E. Labor Productivity and Human Capital: An Interactive Model. Beta. 2025;10:1413–1439.

MLA

Begeç, Enis. “Labor Productivity and Human Capital: An Interactive Model”. Bulletin of Economic Theory and Analysis, vol. 10, no. 3, Oct. 2025, pp. 1413-39, doi:10.25229/beta.1675194.

Vancouver

1.Enis Begeç. Labor Productivity and Human Capital: An Interactive Model. Beta. 2025 Oct. 1;10(3):1413-39. doi:10.25229/beta.1675194

images?q=tbn:ANd9GcRvoKvjUr081z-KcdXLcXXPQTR9B7O8m0BOBg&s

The articles published in this journal are licensed under a Creative Commons Attribution 4.0 International License.

Labor Productivity and Human Capital: An Interactive Model

Emek Verimliliği ve Beşerî Sermaye: İnteraktif Bir Model

Abstract

Keywords

Labor Productivity and Human Capital: An Interactive Model

Abstract

Keywords

References

Details

Primary Language

Subjects

Journal Section

Authors

Early Pub Date

Publication Date

Submission Date

Acceptance Date

Published in Issue

DOI

IZ

Cite