Human Capital as a Driver of Productivity Convergence - Economicus

By Teuta ÇERPJA, Emirgena NIKOLLI

Abstract
This paper aims to examine how human capital contributes to both labor productivity growth and the process of economic convergence with the European Union. The research employs an empirical methodology that combines two complementary methods. First, the effect of human capital on labor productivity in Albania is examined to evaluate its significance as a factor influencing the country’s economic performance. Second, using a panel analysis involving Albania and four chosen Western Balkan nations, the study investigates whether human capital plays a role in the process of productivity convergence towards the level of EU nations. The study provides empirical evidence on the function of human capital as a mechanism that supports both productivity growth and economic convergence with the most developed European countries by integrating the analysis conducted within the nation with the comparative regional perspective. The findings suggest that human capital exerts a positive and statistically significant effect on labor productivity, while evidence of conditional convergence indicates that human capital contributes to productivity catch-up dynamics.

Keywords: human capital, productivity, convergence, transition country, Albania, Western Balkan Countries