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Human Capital, Resource Constraints and Intergenerational Fairness

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Abstract

This paper studies an endogenous growth model with human capital, exhaustible resources, and overlapping generations. Under laissez-faire, higher study time reduces depletion rates by increasing the share of re- sources that present generations are willing to sell to successors. However, selfish behavior may prevent competitive sustained growth, and implement- ing utilitarian allocations generally induces optimal-and-sustainable paths. It is shown that: (i) raising study time and decreasing resource depletion are always complementary targets in optimal policies; (ii) growth effects are stronger the lower the optimal share of exploited resources; (iii) gener- ational welfare gains from optimal policies are delayed by faster depletion and, contrary to intuition, anticipated by lower social discount rates.

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Bibliographic Info

Paper provided by CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich in its series CER-ETH Economics working paper series with number 07/68.

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Length: 3o pages
Date of creation: Jun 2007
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Handle: RePEc:eth:wpswif:07-68

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Keywords: Endogenous Growth; Exhaustible Resources; Human Capital; Over- lapping Generations; Intergenerational Fairness; Sustainability;

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Cited by:
  1. Neustroev, Dmitry, 2013. "The Uzawa-Lucas Growth Model with Natural Resources," MPRA Paper 52937, University Library of Munich, Germany.

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