The study investigates the reciprocal relationship between human capital and economic development at the regional level, focusing on the Lviv region of Ukraine. The authors argue that while human capital is considered crucial for economic growth, the impact of economic development on human capital formation also deserves attention. A system of simultaneous equations is employed to analyze the mutual influence between human capital (measured by the number of employed population) and economic development (measured by gross regional product, EPD). The model incorporates various factors affecting both sides, including capital investments, consumer price index, scientific research expenditures, average salary, and number of graduates from higher education institutions. The model explains 99.4% of the variance in gross regional product by capital investments, consumer price index, scientific research expenditures, and human capital (employed population). The model explains 86.4% of the variance in employed population by average salary and number of graduates from higher education institutions. These results suggest that the model adequately captures the interdependence between human capital and economic development in the Lviv region. The developed simultaneous equation model allows for quantitative assessment of the mutual influence between human capital and economic development factors, providing valuable insights for regional policymakers. This approach goes beyond simply interpreting individual factors’ impact and offers a deeper understanding of their complex interactions.