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Estimated human capital externalities in an endogenous growth framework

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  • Jim Malley
  • Ulrich Woitek

Abstract

To better understand the quantitative implications of human capital externalities at the aggregate level, we estimate a two-sector endogenous growth model with knowledge spill-overs. To achieve this, we account for trend growth in a model consistent fashion and employ a Markov-chain Monte-Carlo (MCMC) algorithm to estimate the model's posterior parameter distributions. Using U.S. quarterly data from 1964-2017, we find significant positive externalities to aggregate human capital. Our analysis further shows that eliminating this market failure leads to sizeable increases in education-time, endogenous growth and aggregate welfare.

Suggested Citation

  • Jim Malley & Ulrich Woitek, 2019. "Estimated human capital externalities in an endogenous growth framework," CESifo Working Paper Series 7603, CESifo.
    • Handle: RePEc:ces:ceswps:_7603
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    More about this item

    Keywords

    human capital externalities; endogenous growth; Bayesian estimation;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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