Click here for search results
Economic freedom, human rights, and the returns to human capital : an evaluation of the Schultz hypothesis, Volume 1
 
Author:King, Elizabeth M.; Montenegro, Claudio E.; Orazem, Peter F.; Collection Title:Policy Research working paper ; no. WPS 5405
Country:World; Date Stored:2010/08/30
Document Date:2010/08/01Document Type:Policy Research Working Paper
SubTopics:Political Economy; Economic Theory & Research; Debt Markets; Labor Policies; Population PoliciesLanguage:English
Region:The World RegionReport Number:WPS5405
Volume No:1  

Summary: According to T.W. Schultz, the returns to human capital are highest in economic environments experiencing unexpected price, productivity, and technology shocks that create "disequilibria." In such environments, the ability of firms and individuals to adapt their resource allocations to shocks becomes most valuable. In the case of negative shocks, government policies that mitigate the impact of the shock will also limit the returns to the skills of managing risk or adapting resources to changing market forces. In the case of positive shocks, government policies may restrict access to credit, labor, or financial markets in ways that limit reallocation of resources toward newly emerging profitable sectors. This paper tests the hypothesis that the returns to skills are highest in countries that allow individuals to respond to shocks. Using estimated returns to schooling and work experience from 122 household surveys in 86 developing countries, this paper demonstrates a strong positive correlation between the returns to human capital and economic freedom, an effect that is observed throughout the wage distribution. Economic freedom benefits those workers who have attained the most schooling as well as those who have accumulated the most work experience.

Official Documents
Official, scanned versions of documents (may include signatures, etc.)
File TypeDescriptionFile Size (mb)
PDF 45 pagesOfficial version*3.15 (approx.)
TextText version**
How To Order

* The official version is derived from scanning the final, paper copy of the document and is the official,
archived version including all signatures, charts, etc.
** The text version is the OCR text of the final scanned version and is not an accurate representation of the final text.
It is provided solely to benefit users with slow connectivity.



Permanent URL for this page: http://go.worldbank.org/GT8P2RIDS0