Implications of Human Capital Public Investments for Regional Unemployment in Indiana

This study investigates the effect of human capital investments - public expenditures for education, training and employment - on the regional unemployment in the counties of Indiana. Using county-level data for the year of 2000 and spatial econometric techniques, the unemployment rate equation is estimated taking into account the spatial dependence of regional labor markets conditions, while controlling for the industry mix, education at-tainment, wages, net commuting, unemployment insurance benefits and human capital public investments. The results show that the county-level applied human capital invest-ments can be a policy that decreases the regional unemployment rate. Evaluated at the sample mean value of net commuting rate of -0.15, the regional unemployment rate is ex-pected to decrease by 0.33 percentage point with a ten million dollars human capital in-vestment in a county. The greatest impact of human capital investments is in counties with very low net commuting rates. A county with minimum commuting benefits more from human capital investments than a county with maximum commuting: a ten million dollars investment in human capital in the region is expected to decrease the regional unemploy-ment rate by 0.46 and 0.10 percentage point respectively.

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Journal Article
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Journal of Regional Analysis and Policy, Volume 37, Issue 3
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 Record created 2017-04-01, last modified 2017-11-15

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