Human Capital Formation and the Missing Re-gional Upgrading in the EU Periphery: the Role of Migration and Education-Job Mismatch

Why the supply of human capital (in peripheral regions) does not create its own demand? The aim of this chapter is to shed lights on the complex channels which link human capital investments, spatial mobility and regional upgrading in peripheral regions. We analyse – using original datasets collected by the authors - two different locally funded human capital investment policies implemented by two neighbouring Italian Mezzogiorno regions, Basilicata and Apulia. In the first part of the chapter, we analyse the ‘leakage’ of the human capital associated to this regional policy through out-migration. This first ‘story’ allows us to underline the high risks of failure of policies which push a single ‘side’ of the human capital market, i.e. its supply, without considering measures that at the same time stimulate its demand. The second policy evaluated in this study was implemented by a larger and more industrialized neighbouring region, Apulia (Borse di ricerca). An ex post evaluation of this policy shows that only 10 percent of the individual beneficiaries is working outside the region. In this case human capital leakage through migration is limited, but our empirical analysis shows that there is a rather severe education-job mismatch in terms of both people being engaged in precarious employment forms (flexible or part-time) and (low) level of competences required in their actual occupation. These two policy cases indicate, in our opinion, that severe market failures characterize the ‘absorption’ of human capital in the local economy rather than its formation.