Effects of Human Capital on Total Factor Productivity in Iran
Subject Areas : Business ManagementAhmad Asadzadeh 1 , Parviz Mohammadzadeh 2 , Akram Akbari 3 , Somaye Atapour 4
1 - Associate Professor, Faculty of Economics, Management and Commerce, Tabriz University
2 - Associate Professor, Faculty of Economics, Management and Commerce, Tabriz University
3 - Master of Science in Tabriz University - Economic Development and Planning
4 - Master of Science in Tabriz University - Economic Development and Planning
Keywords: O47, C14, human capital, Total factor productivity, Malmquist Index, Cointegration JEL: J24,
Abstract :
For many economic planners and policy makers, enhancing productivityhas been one of the efficient methods in increasing economic growth. Basedon that, countries have invested a great deal to increase total factorproductivity. In this article, the effect of human capital, openness to tradeand inflation on total factor productivity has been investigated in Iran during1976-2012. We estimated total factor productivity TFP, using Malmquistindex. We also investigated the effects of various factors on productivity,using Johansen and Juselius’ co-integration techniques. Our findingsindicate that human capital has a positive effect on productivity. We alsofound that openness has a positive and inflation has a negative effect on totalfactor productivity in Iran
Ahmadi Shadmehri, M. T., Naji Meydani, A. A., & Jandaghi Meybodi, F. (2010). Bound's Test Approach to Cointegration: Interaction between Human Capital and Total Factor Productivity of Production in Iran. Quarterly Journal of Economic Growth and Development Research, 31-58, (In Persian).
Aggrey, Niringiye, Eliab, Luvanda and Joseph, Shitundu (2010), "Human capital and labor productivity in East African manufacturing firms", Current Research Journal of Economic Theory, vol. 2, no. 2, pp. 48-54
Amini, A. (2005). Measurement and Trend Analysis of Productivity in Irans Various Economic Sectors. The Journal of Planning and Budgeting, 15-34, (In Persian).
Amini, A., & Hejazi Azad, Z. (2008). Analyzing the role of human capital and research and development in promoting total factor productivity (TFP) in Iranian economy. Economic Research, 1-30, (In Persian).
Teixeira A.C. and Fortuna, Natercia (2012), "Human capital, R&D, trade, and long-run productivity. Testing the technological absorption hypothesis for the Portuguese economy", Research Policy, vol. 39, pp. 335–350.
Charnes, A, W Cooper, and E Rhodes (1978), "Measuring the efficiency of decision making units."European journal of operational research, vol.2 no. 6,pp. 429-44.
Covers, Frank (1997), "The impact of human capital on labor productivity in manufacturing sectors of the European union, Applied Economics, vol. 29, pp. 975-987.
Coelli, T. (1996), "A guide to DEAP version 2.1: a data envelopment analysis (computer) program." Centre for Efficiency and Productivity Analysis, University of New England, Australia.
Dickey, D and Fuller, W.(1981), "Likelihood ratio statistics for autoregressive time series with a unit root", Econometrica, vol. 49, pp. 1057–1072.
Fafchamps, Marcel and R. Quisumbing, Agnes (2000),"Human capital, productivity,
And labor allocation in rural Pakistan", Journal of Human Resource, vol. XXXIV, no. 2, pp. 369-406.
Heston, A, Summers, R and Aten, B (2002), "Penn world table version 7,3:an expanded set of international comparisons, 1950-1988, Quarterly Journal of Economics, vol.106, pp.
Johansen, S and Juselius, K (1990), "Maximum likelihood estimation and inference on Cointegration with application to the demand for money", Oxford Bulletin of Economics and Statistics, vol. 52, pp. 169–209.
Lee, Jong-Wha (2005), "Human capital and productivity for Korea’s sustained economic growth", Journal of Asian Economics, vol. 16, pp. 663–687.
Mankiw, NG, D. Romer, and D.N Weil (1992),"A contribution to the empirics of economic growth."The quarterly journal of economics, vol. 107 no. 2, pp. 407-37.
Maudos, Joaquin, Pastor, Jose Manueland Serrano, Lorenzo (1999), "Total factor productivity measurement and human capital in OECD countries, Economics Letters, vol.63, pp.327-368.39–44.
Musa Ahmed, Elsadig (2008), "ICT and human capital intensities effects on Malaysian productivity growth", International Research Journal of finance and Economics, vol. 13, pp. 152-161.
Nelson, R. R., and Phelips, E. S. (1966).Investment in humans, technological diffusion, andeconomic growth.The American Economic Review, 56(1/2), 69-75.
Sanroma, Esteban and Ramos, Raul (2007), "Local human capital and productivity: An analysis for the Spanish regions", Regional Studies, vol. 41, no. 3, pp. 349-359.
Stephen M. Miller and Mukti P. Upadhyay (2000), "The effects of openness, trade orientation, andhuman capital on total factor productivity", Journal of Development Economics, Vol. 63, pp. 399–423.
Steffen,Wolfgang and Stephan, Johannes (2008), "The role of human capital and managerial skills in explaining productivity gaps between East and West", Eastern European Economics, vol. 46, no. 6, pp. 5–24.
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Ahmadi Shadmehri, M. T., Naji Meydani, A. A., & Jandaghi Meybodi, F. (2010). Bound's Test Approach to Cointegration: Interaction between Human Capital and Total Factor Productivity of Production in Iran. Quarterly Journal of Economic Growth and Development Research, 31-58, (In Persian).
Aggrey, Niringiye, Eliab, Luvanda and Joseph, Shitundu (2010), "Human capital and labor productivity in East African manufacturing firms", Current Research Journal of Economic Theory, vol. 2, no. 2, pp. 48-54
Amini, A. (2005). Measurement and Trend Analysis of Productivity in Irans Various Economic Sectors. The Journal of Planning and Budgeting, 15-34, (In Persian).
Amini, A., & Hejazi Azad, Z. (2008). Analyzing the role of human capital and research and development in promoting total factor productivity (TFP) in Iranian economy. Economic Research, 1-30, (In Persian).
Teixeira A.C. and Fortuna, Natercia (2012), "Human capital, R&D, trade, and long-run productivity. Testing the technological absorption hypothesis for the Portuguese economy", Research Policy, vol. 39, pp. 335–350.
Charnes, A, W Cooper, and E Rhodes (1978), "Measuring the efficiency of decision making units."European journal of operational research, vol.2 no. 6,pp. 429-44.
Covers, Frank (1997), "The impact of human capital on labor productivity in manufacturing sectors of the European union, Applied Economics, vol. 29, pp. 975-987.
Coelli, T. (1996), "A guide to DEAP version 2.1: a data envelopment analysis (computer) program." Centre for Efficiency and Productivity Analysis, University of New England, Australia.
Dickey, D and Fuller, W.(1981), "Likelihood ratio statistics for autoregressive time series with a unit root", Econometrica, vol. 49, pp. 1057–1072.
Fafchamps, Marcel and R. Quisumbing, Agnes (2000),"Human capital, productivity,
And labor allocation in rural Pakistan", Journal of Human Resource, vol. XXXIV, no. 2, pp. 369-406.
Heston, A, Summers, R and Aten, B (2002), "Penn world table version 7,3:an expanded set of international comparisons, 1950-1988, Quarterly Journal of Economics, vol.106, pp.
Johansen, S and Juselius, K (1990), "Maximum likelihood estimation and inference on Cointegration with application to the demand for money", Oxford Bulletin of Economics and Statistics, vol. 52, pp. 169–209.
Lee, Jong-Wha (2005), "Human capital and productivity for Korea’s sustained economic growth", Journal of Asian Economics, vol. 16, pp. 663–687.
Mankiw, NG, D. Romer, and D.N Weil (1992),"A contribution to the empirics of economic growth."The quarterly journal of economics, vol. 107 no. 2, pp. 407-37.
Maudos, Joaquin, Pastor, Jose Manueland Serrano, Lorenzo (1999), "Total factor productivity measurement and human capital in OECD countries, Economics Letters, vol.63, pp.327-368.39–44.
Musa Ahmed, Elsadig (2008), "ICT and human capital intensities effects on Malaysian productivity growth", International Research Journal of finance and Economics, vol. 13, pp. 152-161.
Nelson, R. R., and Phelips, E. S. (1966).Investment in humans, technological diffusion, andeconomic growth.The American Economic Review, 56(1/2), 69-75.
Sanroma, Esteban and Ramos, Raul (2007), "Local human capital and productivity: An analysis for the Spanish regions", Regional Studies, vol. 41, no. 3, pp. 349-359.
Stephen M. Miller and Mukti P. Upadhyay (2000), "The effects of openness, trade orientation, andhuman capital on total factor productivity", Journal of Development Economics, Vol. 63, pp. 399–423.
Steffen,Wolfgang and Stephan, Johannes (2008), "The role of human capital and managerial skills in explaining productivity gaps between East and West", Eastern European Economics, vol. 46, no. 6, pp. 5–24.