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The Knowledge Trap: Human Capital and Development Reconsidered

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  • Benjamin F. Jones
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    Abstract

    This paper presents a model where human capital differences - rather than technology differences - can explain several central phenomena in the world economy. The results follow from the educational choices of workers, who decide not just how long to train, but also how broadly. A "knowledge trap" occurs in economies where skilled workers favor broad but shallow knowledge. This simple idea can inform cross-country income differences, international trade patterns, poverty traps, and price and wage differences across countries in a manner broadly consistent with existing empirical evidence. The model also provides insights about the brain drain, migration, and the role for multinationals in development. More generally, this paper shows that standard human capital accounting methods can severely underestimate the role of education in development. It shows how endogenous educational decisions can replace exogenous technology differences in a range of economic reasoning.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14138.

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    Date of creation: Jun 2008
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    Handle: RePEc:nbr:nberwo:14138

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    Cited by:
    1. Franzoni, Chiara & Scellato, Giuseppe & Stephan, Paula, 2014. "The mover’s advantage: The superior performance of migrant scientists," Economics Letters, Elsevier, Elsevier, vol. 122(1), pages 89-93.
    2. Ajay Agrawal, 2014. "Diaspora Networks, Knowledge Flows and Brain Drain," WIPO Economic Research Working Papers, World Intellectual Property Organization - Economics and Statistics Division 15, World Intellectual Property Organization - Economics and Statistics Division.
    3. Ajay Agrawal & Avi Goldfarb & Florenta Teodoridis, 2013. "Does Knowledge Accumulation Increase the Returns to Collaboration?," NBER Working Papers 19694, National Bureau of Economic Research, Inc.
    4. Guy Michaels, 2010. "Challenges for research on resource-rich economies," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 55256, London School of Economics and Political Science, LSE Library.
    5. Boh, Wai Fong & Evaristo, Roberto & Ouderkirk, Andrew, 2014. "Balancing breadth and depth of expertise for innovation: A 3M story," Research Policy, Elsevier, Elsevier, vol. 43(2), pages 349-366.
    6. Jaimovich, Esteban, 2011. "Sectoral differentiation, allocation of talent, and financial development," Journal of Development Economics, Elsevier, Elsevier, vol. 96(1), pages 47-60, September.
    7. Atal, Vidya & Basu, Kaushik & Gray, John & Lee, Travis, 2009. "Literacy Traps: Society-Wide Education and Individual Skill Premia," Working Papers, Cornell University, Center for Analytic Economics 09-05, Cornell University, Center for Analytic Economics.
    8. Timothy Simcoe, 2012. "Standard Setting Committees: Consensus Governance for Shared Technology Platforms," American Economic Review, American Economic Association, American Economic Association, vol. 102(1), pages 305-36, February.

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