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Human Capital Externality, Knowledge Spillover, and Sustainable Economic Growth

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  • Xiangcai Meng

    (Department of Trade and Economics, College of Management, Fuzhou University)

  • Azhong Ye

    (Department of Trade and Economics, College of Management, Fuzhou University)

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    Abstract

    We attempt to introduce human capital externality and endogenous laborleisure decision into the analytical framework constructed by Uzawa (1965) and Lucas (1988) simultaneously, so as to explore the internal relationship among endogenous labor supply, human capital externality and sustainable economic growth as well as the choice problem of government¡¯s education policy. The main conclusions of this thesis are as follows: 1. The sound degree of household¡¯s time endowment allocation and the magnitude of human capital externality will work on the height of the steady state¡¯s growth rate on the balanced growth path. 2. The larger the subjective time preference and the stronger the leisure awareness is, the lower the steady state¡¯s growth rate of the country will be; the larger the output elasticity and education investment expenditure elasticity of knowledge spillover becomes, the higher the steady state¡¯s growth rate of the country will be; and vice versa. 3. The government can choose from carrying out lump-sum output taxation or education subsidy to stimulate the adjustment of private labor supply and human capital investment, such that the decentralized economy could be induced to the sustainable optimal growth state. We employ China¡¯s province level panel data to analyze empirically, all the main conclusions are supported by the empirical research; meanwhile, we also observed some puzzles which are different from the existing conclusions.

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    Bibliographic Info

    Article provided by Society for AEF in its journal Annals of Economics and Finance.

    Volume (Year): 10 (2009)
    Issue (Month): 1 (May)
    Pages: 155-198

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    Handle: RePEc:cuf:journl:y:2009:v:10:i:1:p:155-198

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    Related research

    Keywords: Human capital externality; Knowledge spillover; Sustainable economic growth; Education policy; Panel data model;

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    References

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    1. Alan Krueger & Mikael Lindahl, 2000. "Education for Growth: Why and For Whom?," Working Papers 808, Princeton University, Department of Economics, Industrial Relations Section..
    2. Zhang, Jie, 2003. "Optimal debt, endogenous fertility, and human capital externalities in a model with altruistic bequests," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1825-1835, August.
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    Cited by:
    1. Wang, Chan, 2012. "A very preliminary survey on growth and development," MPRA Paper 39037, University Library of Munich, Germany.

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