Human capital and growth in an OLG-life cycle model

The paper proposes a continuous-time overlapping generations (OLG) model, in which the representative agent of each generation faces a finite lifetime horizon, maximizes intertemporal consumption utility, and accumulates human capital as the single input employed in the generation of income. The model allows for highlighting and scrutinizing a few sources of nonlinearities and cyclical behavior on growth, namely those associated with technology diffusion, intergenerational knowledge spillovers, intergenerational income transfers, and the influence of role models over future generations. Analytical results regarding the growth of aggregate income and consumption are derived and numerical illustrations are used to elucidate about the formation of a variety of distinct patterns of growth. The novelty of the analysis resides on the fact that although new generations are born at every instant, there is a delayed impact of any event or action over future generations; thus, triggering unconventional growth paths, which are typically absent from long-term growth analysis, both in the context of OLG models and representative-agent intertemporal models.