Scale effects, saving and factor shares in a human capital-based growth model with physical capital accumulation
AbstractUsing a balanced-growth model with physical and human capital accumulation, this article analyzes quantitatively the long run effects of changes in the saving rate and in income distribution (i. e. , the shares of physical and human capital in income) on investment in human capital, growth of income, and the ratio of human to physical capital. In the long run the ratio of physical to human capital is constant, so that these two production factors can grow at the same rate. This rate is a function of the economy’s exogenous technological and preference parameters and depends positively on the share of skills invested in human capital formation. We also find that population growth is neither necessary nor conducive to economic growth and that the level of real income depends linearly on the level of human capital and is independent of population size.
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Bibliographic InfoPaper provided by Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano in its series Departmental Working Papers with number 2008-29.
Date of creation: 26 Jul 2008
Date of revision:
Economic Growth; Human and Physical Capital Investment; Scale Effects;
Other versions of this item:
- Alberto Bucci, 2009. "Scale Effects, Savings and Factor Shares in a Human Capital-based Growth Model with Physical Capital Accumulation," International Economic Journal, Taylor & Francis Journals, vol. 23(3), pages 291-307.
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-06-17 (All new papers)
- NEP-DEV-2009-06-17 (Development)
- NEP-DGE-2009-06-17 (Dynamic General Equilibrium)
- NEP-FDG-2009-06-17 (Financial Development & Growth)
- NEP-HRM-2009-06-17 (Human Capital & Human Resource Management)
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