Investigating the Effect of Human Capital on Regional Convergence in Iranian Economy: Spatial Econometric Approach

Abstract

The purpose of this study is to investigating the effect of direct and spillovers effect of human capital on regional convergence in Iran provinces based on the spatial Solow convergence model. For this purpose, based on the latest information available at the regional level, data from different provinces of the country have been used during the time period of 2005-2017. Also, the spatial dynamic Durbin model (DSDM is used to estimation of the model. According to the results, regional convergence in the country is confirmed, but the convergence rate is low (about 0.063%). Thus, the different regions of the country, in average, with a convergence rate of about 0.063% move in the direction of balanced growth towards a steady state situtation.Other results of the study have shown that human capital has direct positive and significant impacts on regional convergence in Iran.

Keywords

• human capital
• spatial spillover
• spatial econometric
• regional convergence