VOLUME X
SPRING 2002

REGIONAL WAGES AND HUMAN CAPITAL ENDOWMENT
 
LORENZO SERRANO
Universidad de Valencia e IVIE
 
This paper analyses the potencial bias due to measurement errors in human capital, and analyses the relationship between regional wages and regional human capital endowments in Spain. To that end, we use an approach that takes into account the possible measurement error in human capital indicators. The results indicate that measurement errors have the effect of biasing downwards the estimated effect of human capital. When allowing for the possibility of measurement errors, wages show a much higher elasticity with respect to human capital, there would be neither significant incentives to migrate nor marked welfare gains to be achieved through a higher hypothetical labour mobility.
 
Key words: human capital, regional wages, measurement error, labour mobility.
JEL classification: C23, J31, J61, R23.

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