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.
Highlights
Education and urbanization currently represent two important patterns for the development of human capital
It has been found that children growing up in urban areas achieve a higher level of human capital than children in rural areas due to observed cognitive abilities and various family traits [11]
We can say that human capital can be defined as the collection of knowledge, skills and other personal characteristics that embody people who help them to be productive
Summary
Education and urbanization currently represent two important patterns for the development of human capital. Estimates based on the data from some countries suggest that a 10-percentage point increase in the proportion of urban population is associated with an average increase in education of more than 1 month [3] This indicates a regional gap in human capital formation with urban population having a comparative advantage over the rural one [4]. Some cross-sectional studies show a significant rural-urban gap in education outcomes across a wide range of countries [13, 14] It is unclear how this gap is explained by the spatial division of households and whether it reflects the benefits of cities for the education of their populations. With regard to differences in education levels, the promotion of policies such as urban and rural integration and urban and rural education should be balanced in order to provide a guarantee of reducing the differences between urban and rural educational levels
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