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Kuznets meets Lucas: structural change and human capital

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  • Edgar Cruz

Abstract

This paper develops a multi-sector growth model with human capital accumulation. In this model, human capital induces structural change through two channels: changes in relative prices and changes in the investment rate of physical and human capital. We show that the specifications of the model give rise to a generalized balanced growth path (GBGP). Furthermore, We show that the model is consistent with (i) the decline in agriculture, (ii) the hump-shaped of manufacturing, (iii) the rise of the services sector, and (iv) the path of human capital accumulation in the US economy during the 20th century. Given the findings, We outline that imbalances between physical and human capital contribute to explain cross-country differences in the pace of structural change.

Suggested Citation

  • Edgar Cruz, 2019. "Kuznets meets Lucas: structural change and human capital," Oxford Economic Papers, Oxford University Press, vol. 71(4), pages 848-873.
    • Handle: RePEc:oup:oxecpp:v:71:y:2019:i:4:p:848-873.
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    File URL: http://hdl.handle.net/10.1093/oep/gpy056
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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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