Basu, Sujata and Mehra, Meeta K (2011): Endogenous human capital formation, distance to frontier and growth.
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We examine human capital's contribution to economy-wide technological progress through two channels -- imitation and innovation -- innovation being more skilled-intensive than innovation. We develop a growth model considering an endogenous ability-driven skill acquisition decision of an individual. We show that skilled labor is growth enhancing in the ``imitation-innovation" regime and the ``innovation-only" regime whereas unskilled labor is growth enhancing in the ``imitation-only" regime. Steady state exists and, in the long run, an economy may or may not converge to the world technology frontier, depending on its initial position and the growth rate of the frontier economy. In the diversified regime, technological progress raises the return to ability and generates an increase in wage inequality between and within groups -- consistent with the pattern observed across countries.
|Item Type:||MPRA Paper|
|Original Title:||Endogenous human capital formation, distance to frontier and growth|
|Keywords:||Economic Growth; Endogenous Labor Composition; Imitation-Innovation; Convergence; Wage Inequality|
|Subjects:||O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O43 - Institutions and Growth
I - Health, Education, and Welfare > I2 - Education and Research Insititutions > I21 - Analysis of Education
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development; Intellectual Property Rights
|Depositing User:||Sujata Basu|
|Date Deposited:||28. Mar 2012 12:27|
|Last Modified:||13. Feb 2013 13:56|
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