Human Capital in Economic Development: From Labour Productivity to Macroeconomic Impact

Kristinn Hermannsson, Patrizio Lecca

Research output: Working paperDiscussion paper

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Micro-econometric evidence reveals high private returns to education, most prominently in low-income countries. However, it is disputed to what extent this translates into a macro-economic impact. This paper projects the increase in human capital from higher education in Malawi and uses a dynamic applied general equilibrium model to estimate the resulting macroeconomics impact. This is contingent upon endogenous adjustments, in particular how labour productivity affects competitiveness and if this in turn stimulates exports. Choice among commonly applied labour market assumptions and trade elasticities results in widely different outcomes. Appraisal of such policies should consider not only the impact on human capital stocks, but also adjustments outside the labour market.
Original languageEnglish
Place of PublicationGlasgow
PublisherUniversity of Strathclyde
Number of pages18
Publication statusPublished - 2015


  • human capital
  • higher education
  • labour markets
  • trade
  • Malawi


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