Working Paper BETA #2016-32

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Title : Remoteness equals backwardness? Human capital and market access in the European regions: insights from the long run

Author(s) : Claude Diebolt, Ralph Hippe

Abstract : In a recent contribution, Redding and Schott (2003) add human capital to a two sector NEG model, highlighting that remoteness represents a penalty that gives disincentives to invest in human capital. But is this hypothesis consistent with long-term evidence? We test the persistence of this effect at the regional level in an historical setting. The results show that market access has a significant positive influence on human capital in OLS, Tobit and IV regression models. Thus, the paper confirms the ‘penalty of remoteness’ hypothesis for Europe in the long run.

Key-words : Human Capital, New Economic Geography, Regional Development, Market Access.

JEL Classification : I21, N33, N93, R11.