Converging to Convergence: The Role of Human Capital

Abstract This paper analyses σ−convergence and absolute β−convergence in human capital indicators in a sample of 140 countries from 1970 to 2020. The literature has found some evidence of absolute convergence in per capita income since 2000s. As convergence in human capital preceded convergence in per capita income, human capital may have played a role in this process. We find that the coefficient of β−convergence in per capita income, conditional on the initial level of human capital, is twice as high as the β−coefficient of unconditional convergence. The difference between both coefficients accounts for the role of human capital in explaining absolute convergence in per capita income in recent decades. When we control for institutions, the difference between absolute and conditional convergence is very low, suggesting that human capital has played a greater role in the speed of convergence. The results hold with alternative measures of human capital and development, and are robust to the inclusion of fixed effects and regional dummies to account for omitted variables. JEL Classification: O11, O15, O4, O47.