Remoteness Equals Backwardness? Human Capital and Market Access in the European Regions: Insights from the Long Run

In a recent contribution, Redding and Schott [2003. "Distance, Skill Deepening and Development: Will Peripheral Countries Ever Get Rich?" "Journal of Development Economics": 72 (2): 515-541. doi:10.1016/S0304-3878(03)00118-4] add human capital to a two sector NEG model, highlighting that remoteness represents a penalty that gives disincentives to invest in human capital. But is this hypothesis consistent with long-term evidence? We test the persistence of this effect at the regional level in an historical setting. The results show that market access has a significant positive influence on human capital in OLS, Tobit and IV regression models. Thus, the paper confirms the 'penalty of remoteness' hypothesis for Europe in the long run.