Scandinavian Working Papers in Economics
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CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology KTH/CESIS Working Paper Series in Economics and Institutions of Innovation

No 220:
Skill and Cross-National Economic Performance

Richard Florida and Charlotta Mellander ()

Abstract: The role of human capital in shaping cross-national economic performance is well-understood. But human capital is an indirect measure of skill, based on educational attainment. We introduce and test a more direct measure of skill, based on work that is actually performed, measured by occupation. Recent empirical studies have shown that such occupational “classes” play an important role in regional economic performance, out-performing human capital in some cases. We develop a measure of occupational skill and examine its relation to in cross-national economic performance. We explicitly compare this measure to conventional measures of human capital (based on educational attainment) through formal models of economic performance for 55 to 78 countries, using three measures of economic performance – economic output (GDP per capita), productivity (total factor productivity) and innovative performance (patents). The results confirm the hypothesis, indicating that our occupation-based measure closely is associated with all three measures of economic performance and also that it consistently performs better than human capital in these models.

Keywords: skills; creativity; productivity; growth; (follow links to similar papers)

JEL-Codes: O31; (follow links to similar papers)

28 pages, February 11, 2010

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