Human capital agglomeration and social returns to education in Colombia
The series Working Papers on Economics is published by the Office for Economic Studies at the Banco de la República (Central Bank of Colombia). The works published are provisional, and their authors are fully responsible for the opinions expressed in them, as well as for possible mistakes. The opinions expressed herein are those of the authors and do not necessarily reflect the views of Banco de la República or its Board of Directors.
We provide evidence of private returns to education and of externalities which jointly render social returns to education in Colombia. The spillover is generated by the share of college-educated workers within the working-age population. Thus, the higher this share in the cities, the higher the wages. The size of the externality is about 1.13; that is, an increase of one percentage point in the share will increase wages by 1.13%. For mid-to-high and high educated workers the externality is about 1.07 and 1.3 while for low educated workers it is 0.92,. The public policy program instituted by the agency in charge of promoting undergraduate and graduate education has contributed to increase wages all over the country but mainly in cities different from Bogotá. A positive correlation between the size of cities and human capital agglomeration is also observed; as a result, the size of cities also has predictive power on the externality.
The opinions expressed here do not necessarily correspond neither to the Banco de la República nor its Board of Directors.
Update: 20/04/2018, 11:15 a. m.
