Missing Markets for Human Capital and Differences in Growth
AbstractStandard growth models predict that consumption and GNP growth rates should not differ among countries when international capital markets are considered. This paper introduces a generational structure which implies that the return on human capital exceeds the return on physical capital in equilibrium. Thus, when the return on human capital differs internationally, the growth rates of consumption and GNP vary across countries even when there is free capital mobility. Furthermore, GNP and GDP grow at the same rate within a country, there is positive investment in every country, and poverty traps persist in spite of international capital markets. Copyright (c) The London School of Economics and Political Science 2005.
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Bibliographic InfoPaper provided by IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University in its series Working Papers with number 108.
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Other versions of this item:
- Fernando Perera-Tallo, 2005. "Missing Markets for Human Capital and Differences in Growth," Economica, London School of Economics and Political Science, vol. 72(286), pages 241-265, 05.
- Fernando Perera Tallo, 2003. "Missing Markets for Human Capital and Differences in Growth," Centro de AltiÂsimos Estudios RiÂos PeÂ©rez(CAERP) 9, Centro de Altisimos Estudios Rios Perez (CAERP).
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