Regional gap in human capital: determinants of education and urbanization

Abstract

This paper studies the regional gap in human capital. Specifically, it focuses on the important determinants of this capital represented by such key factors as education and urbanization. We stress the importance of human capital for the economic growth and show how it can be important for the effective development of both urban and rural areas. This study examines the regional distribution and dynamics of human capital. Human capital is credited with a crucial role in the creation of economic growth. Additionally, we investigate how the exposure to the urban or rural environment affects the educational success of people worldwide. In addition, our paper studies the effects of migration on urbanization and education. Our results show that institutional factors can be a good proxy for explaining the relationship between human capital development and urbanization. Furthermore, it can be concluded that return to education is higher in urban areas compared to rural areas, and higher in highly educated cities compared to smaller towns. All of these creates some important implications for urbanization and education that can be used by the policy-makers and urban and rural planners for narrowing the regional gap in human capital and increasing the overall well-being and economic growth.