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Education, Neighborhood Effects And Growth: An Agent-Based Model Approach

Author

Listed:
  • TANYA ARAÚJO

    () (ISEG (School of Economics and Management), Technical University of Lisbon (TULisbon), Rua do Quelhas, 6 1200-781 Lisboa, Portugal)

  • MIGUEL ST. AUBYN

    (ISEG (School of Economics and Management), Technical University of Lisbon (TULisbon), Rua do Quelhas, 6 1200-781 Lisboa, Portugal)

Abstract

Endogenous, ideas-led growth theory and the literature on agent-based modeling with neighborhood effects are crossed. In an economic overlapping generations framework, it is shown how social interactions and neighborhood effects are of vital importance in the endogenous determination of the long run number of skilled workers and therefore of the growth prospects of an economy. Neighborhood effects interact with the initial distribution of skilled agents across space and play a key role in the long run stabilization of the number of skilled individuals. Our model implies a tendency toward segregation, with a possibly positive influence on growth, if team effects operate. The long run growth rate is also shown to depend on the rate of time preference. Initial circumstances are of vital importance for long run outcomes. A poor initial education endowment will imply a long run reduced number of skilled workers and a mediocre growth rate, so there is no economic convergence tendency. On the contrary, poor societies will grow less, or will even fall into a poverty trap, and will diverge continuously from richer ones.

Suggested Citation

  • Tanya Araújo & Miguel St. Aubyn, 2008. "Education, Neighborhood Effects And Growth: An Agent-Based Model Approach," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 11(01), pages 99-117.
  • Handle: RePEc:wsi:acsxxx:v:11:y:2008:i:01:n:s0219525908001441
    DOI: 10.1142/S0219525908001441
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    References listed on IDEAS

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    Cited by:

    1. Garth Holloway & Ma. Lucila A. Lapar, 2007. "How Big is Your Neighbourhood? Spatial Implications of Market Participation Among Filipino Smallholders," Journal of Agricultural Economics, Wiley Blackwell, vol. 58(1), pages 37-60, February.

    More about this item

    Keywords

    Agent modeling; economic growth; education; human capital; neighborhood effects; poverty trap;

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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