Human capital inequality and economic growth: evidence with sub-national data from Thailand

Abstract

Purpose The purpose of this paper is to find the effects of human capital inequality on economic growth. Design/methodology/approach Thailand Labor Force Survey has been used to generate provincial average years of schooling and Gini coefficient of years of schooling for the years 1995‒2012. Econometric techniques have been employed to identify the effects of human capital inequality on economic growth. Findings Economic growth is inversely affected by the distribution of human capital in Thailand. The coefficient of human capital inequality suggests that if Gini coefficient increases by 0.01 points, gross provincial product (GPP) decreases by about 2 percentage points in the long run. However, the effect of average years of schooling in GPP is not significant. Research limitations/implications There is a lack of strong theoretical background for the relationship between human capital inequality and economic growth to support the empirical study. Practical implications The findings of the study help to design and evaluate education policies in developing countries like Thailand and other low- and middle-income countries. Originality/value This paper is among the first attempts to analyze the effect of human capital inequality on economic growth with sub-national level annual data. In addition, it considers cross sectional dependence in panel model.