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Technological Change, Human Capital Structure, and Multiple Growth Paths

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  • Kim, Yong Jin

    (Ajou University)

  • Lee, Jong-Wha

    (Asian Development Bank)

Abstract

This paper presents a theoretical model to analyze the effects of technology change on growth rates of income and human capital in the uncertain environments of technology. The uncertainty comes from two sources; the possibility of a technology advance and the characteristics of new technologies. We set up an overlapping generations model in which young agents invest in both width and depth of human capital in order to adopt new technologies. The model develops explicitly the micro-mechanism of the role of human capital in adopting new technologies as well as that of the process of human capital production in uncertain environments. In our model, a higher level for width of human capital relative to the level of depth leads one country to a higher growth path. We also show that an economy can have different growth paths depending on the initial structure of human capital and the uncertainty about the nature of new technologies. In particular, new technologies with more uncertain characteristics may adversely affect human capital accumulation and income growth, leading the economy to a low growth trap.

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Bibliographic Info

Paper provided by Asian Development Bank in its series ADB Economics Working Paper Series with number 149.

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Length: 42 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:ris:adbewp:0149

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Keywords: education; endogenous growth; human capital; technology adoption;

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Cited by:
  1. Ha, Joonkyung & Jin Kim, Yong & Lee, Jong-Wha, 2009. "The Optimal Structure of Technology Adoption and Creation: Basic Research vs. Development in the Presence of Distance to Frontier," ADB Economics Working Paper Series, Asian Development Bank 163, Asian Development Bank.
  2. Saibal Kar & Chaitali Sinha, 2014. "Sectoral Technical Progress and Aggregate Skill Formation," Journal of Industry, Competition and Trade, Springer, Springer, vol. 14(2), pages 159-172, June.

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