TY - BOOK ID - 133365952 TI - Economic freedom, human rights, and the returns to human capital : an evaluation of the Schultz hypothesis AU - Montenegro, Claudio E. AU - King, Elizabeth M. AU - Orazem, Peter F. PY - 2010 PB - Washington, D.C., The World Bank, DB - UniCat KW - Capital flows KW - Capital investments KW - Debt Markets KW - Developing countries KW - Developing country KW - Development bank KW - Economic development KW - Economic Theory & Research KW - Finance and Financial Sector Development KW - Financial markets KW - Government policies KW - Gross domestic product KW - Health, Nutrition and Population KW - Human capital KW - Human development KW - Income inequality KW - International bank KW - Labor Policies KW - Living standards KW - Macroeconomics and Economic Growth KW - Negative shocks KW - Political Economy KW - Population Policies KW - Return KW - Returns KW - Social Protections and Labor KW - Trading KW - Transaction KW - Transaction costs UR - https://www.unicat.be/uniCat?func=search&query=sysid:133365952 AB - According to T.W. Schultz, the returns to human capital are highest in economic environments experiencing unexpected price, productivity, and technology shocks that create "disequilibria." In such environments, the ability of firms and individuals to adapt their resource allocations to shocks becomes most valuable. In the case of negative shocks, government policies that mitigate the impact of the shock will also limit the returns to the skills of managing risk or adapting resources to changing market forces. In the case of positive shocks, government policies may restrict access to credit, labor, or financial markets in ways that limit reallocation of resources toward newly emerging profitable sectors. This paper tests the hypothesis that the returns to skills are highest in countries that allow individuals to respond to shocks. Using estimated returns to schooling and work experience from 122 household surveys in 86 developing countries, this paper demonstrates a strong positive correlation between the returns to human capital and economic freedom, an effect that is observed throughout the wage distribution. Economic freedom benefits those workers who have attained the most schooling as well as those who have accumulated the most work experience. ER -