Human Capital and Productivity in a Spatial Economic System – Relating the Extent of Spatial Dependence to Localities’ Position

Focusing on the role of human capital for productivity, a locality's position in a hierarchical spatial economic system is likely to alter the importance of the human capital in surrounding localities for its productivity level. By estimating a spatial cross-regressive model on Swedish municipal data, we show that the relative importance of external human capital for localities with low position in a hierarchy is significantly larger than for localities with high position.