Documentos de trabajo
Economic Freedom, Human Rights, and the Returns to Human Capital: An Evaluation of the Schultz Hypothesis
Fecha
2010Registro en:
Series Documentos de Trabajo No. 320, Julio, 2010
Autor
King, Elizabeth M.
Montenegro Muñoz, Claudio
Orazem, Peter
Institución
Resumen
T.W. Schultz (1975) proposed that returns to human capital were highest in economic
environments where technology, price or production shocks were common and managerial skills
to adapt resource allocations to those shocks were most in need. We hypothesize that variation
in returns to human capital across developing countries can be explained in part by government
institutions that blunt the magnitude of those shocks or that limit individual abilities to respond
to those shocks. Using estimated returns to schooling and experience from 122 household
surveys from 86 developing countries, we demonstrate a strong positive correlation between
economic freedom and returns to human capital. The positive effect is observed at all quantiles
of the wage distribution. Economic freedom benefits the most skilled who get higher returns to
schooling; but it also benefits the least skilled who get higher returns from experience.