The ‘fractal dimension’ of the market potential–human capital relation

ABSTRACT

The empirical analysis of the impact of market potential on the spatial distribution of human capital has often taken the approach of using samples of large economic areas (world sample of countries, Europe, single countries). This paper proposes to strengthen the analysis of the potential ‘fractal dimension’ of the market potential–human capital relation by estimating econometric specifications which relate educational attainment levels to market potential for the 53 Galician counties using yearly data over the period 2005–2012 and census data for 2001 and 2011. We find evidence that market potential exerts a positive impact on the spatial distribution of human capital across the Galician counties, concluding therefore in favour of the fractal dimension. These results could also help to explain the (lack of) convergence in terms of income between the Western and Eastern parts of Galicia.

KEYWORDS:

• Market potential
• human capital
• Galicia
• Spain

JEL CLASSIFICATION:

• R11
• R12

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ ‘Comarca’ is the name for territorial units which are one-level up the municipal level. Galicia is divided into 53 comarcas and 313 municipalities. See the list of comarcas in the appendix

² IGE: Instituto Galego de Estatística, www.ige.eu

³ Via michelín, www.viamichelin.es

⁴ The indexes HMP1 compared vis-à-vis with HMP2 (HMP3 vis-à-vis HMP4) differ only in the way distances are measured. We use kilometres in the case of HMP1 and HMP3 and travel times in the cases of HMP2 and HMP4. However, due to the high quality of infrastructures in Galicia, there is a strong correlation between measuring market potential using travel times or physical distances. This is reflected in coefficient estimates and SEs of the same size.

Additional information

Funding

This work was supported by the Ministerio de Economía y Competitividad [ECO2015-68597-P (MINECO/FEDER))].