Human capital, technological progress and technology diffusion across Europe: education matters

The paper examines the impact of human capital on the growth of total factor productivity in European countries. Using the modified Nelson-Phelps framework, we estimate regressions based on panel data for the period 1950-2014, measured as 5-year averages. The GMM estimates show the positive and statistically significant effects of human capital on technological progress and diffusion. However, the results do not favour the convergence of all countries in the sample to the technological frontier. In addition to countries that are not yet members of the European Union (EU), our estimates suggest that peripheral EU countries have a weak convergence rate due to insufficient investment in human capital.