Human capital and regional growth in Finland

Recent investigations of regional growth have paid a great attention to convergence of per-capita income. These studies have shown the human capital to be a significant factor in addition to labour force, capital and technical progress when explaining the economic growth. This paper examines the convergence, and in particular the impact of human capital on regional growth in Finland. We estimate a standard neoclassical growth model extended by a human capital accumulation. The regional growth for many sectors of the finnish economy is analysed on the basis of data consisting of 12 provinces during the period 1960-1995 and 88 subregions during the period 1988-1995. The human capital is measured by the education level of the labour force with three categories and, moreover, it is constructed a regional indicator of the educational level.