IDEAS home Printed from https://ideas.repec.org/a/zbw/espost/82822.html
   My bibliography  Save this article

Capital Augmenting and Labor Augmenting Approach in Measuring Contribution of Human Capital and Education to Economic Growth

Author

Listed:
  • Popović, Milenko

Abstract

In this paper an effort has been made to unveil some hidden and implicit assumptions that has been used in different models dealing with analysis and measurement of contribution of human capital to economic growth. We start from general production function with heterogeneous labor input and general production function with heterogeneous human and physical capital. By introducing different assumptions regarding partial elasticity of substitution between different factors of production we derived different models for human capital contribution. Apart from making hidden assumptions of existing models explicit, we also derived dozen of others models that can be used for same purposes. Among those newly proposed models especially important are those that are derived from general production function with heterogeneous human capital and that are based on assumption of unlimited partial elasticity of substitution between different kinds of human capital. First, they allow for more detailed sources of growth analysis. Second, they do not have any problem with wage premium increase experienced in last three decade, which make problematic usage of most of other models used so far.

Suggested Citation

  • Popović, Milenko, 2006. "Capital Augmenting and Labor Augmenting Approach in Measuring Contribution of Human Capital and Education to Economic Growth," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 71-108.
    • Handle: RePEc:zbw:espost:82822
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/82822/1/2.%20Lbor%26Capital%20Adjusted%20Approach_WP.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. George Psacharopoulos, 1985. "Returns to Education: A Further International Update and Implications," Journal of Human Resources, University of Wisconsin Press, vol. 20(4), pages 583-604.
    2. Lucas, Robert E, Jr, 1993. "Making a Miracle," Econometrica, Econometric Society, vol. 61(2), pages 251-272, March.
    3. D. W. Jorgenson & Z. Griliches, 1967. "The Explanation of Productivity Change," Review of Economic Studies, Oxford University Press, vol. 34(3), pages 249-283.
    4. Jones, Charles I., 2005. "Growth and Ideas," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 16, pages 1063-1111 Elsevier.
    5. Dale W. Jorgenson & Barbara M. Fraumeni, 1992. "The Output of the Education Sector," NBER Chapters,in: Output Measurement in the Service Sectors, pages 303-341 National Bureau of Economic Research, Inc.
    6. Robert J. Barro & Paul Romer, 1993. "Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number barr93-1.
      • Robert J. Barro & Paul M. Romer, 1991. "Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number barr91-1.
    7. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    8. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
    9. Eisner, Robert, 1988. "Extended Accounts for National Income and Product," Journal of Economic Literature, American Economic Association, vol. 26(4), pages 1611-1684, December.
    10. Mary Jean Bowman, 1964. "Schultz, Denison, and the Contribution of "Eds" to National Income Growth," Journal of Political Economy, University of Chicago Press, vol. 72, pages 450-450.
    11. Mulligan, Casey B & Sala-i-Martin, Xavier, 2000. "Measuring Aggregate Human Capital," Journal of Economic Growth, Springer, vol. 5(3), pages 215-252, September.
    12. Paul M. Romer, 1987. "Crazy Explanations for the Productivity Slowdown," NBER Chapters,in: NBER Macroeconomics Annual 1987, Volume 2, pages 163-210 National Bureau of Economic Research, Inc.
    13. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
    14. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May.
    15. Barbara Sianesi, 2002. "The returns to education: a review of the empirical macro-economic literature," IFS Working Papers W02/05, Institute for Fiscal Studies.
    16. Mulligan, C. B. & Sala-i-Martin, X., 1997. "A labor income-based measure of the value of human capital: An application to the states of the United States," Japan and the World Economy, Elsevier, vol. 9(2), pages 159-191, May.
    17. Jorgenson, Dale W & Fraumeni, Barbara M, 1992. " Investment in Education and U.S. Economic Growth," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages 51-70, Supplemen.
    18. Maddison, Angus, 1987. "Growth and Slowdown in Advanced Capitalist Economies: Techniques of Quantitative Assessment," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 649-698, June.
    19. Gregory Mankiw, 1995. "The Growth of Nations," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 275-326.
    20. John W. Kendrick, 1973. "Postwar Productivity Trends in the United States, 1948–1969," NBER Books, National Bureau of Economic Research, Inc, number kend73-1.
    21. Moses Abramovitz, 1956. "Resource and Output Trends in the United States Since 1870," NBER Books, National Bureau of Economic Research, Inc, number abra56-1.
    22. John W. Kendrick, 1976. "The Formation and Stocks of Total Capital," NBER Books, National Bureau of Economic Research, Inc, number kend76-1.
    23. Moses Abramovitz, 1956. "Resource and Output Trends in the United States Since 1870," NBER Chapters,in: Resource and Output Trends in the United States Since 1870, pages 1-23 National Bureau of Economic Research, Inc.
    24. Zvi Griliches, 1963. "The Sources of Measured Productivity Growth: United States Agriculture, 1940-60," Journal of Political Economy, University of Chicago Press, vol. 71, pages 331-331.
    25. Jayasri Dutta & J. A. Sefton & M. R. WEALE, 2001. "Income distribution and income dynamics in the United Kingdom," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(5), pages 599-617.
    26. Barbara Sianesi & John Van Reenen, 2000. "The Returns to Education: A Review of the Macro-Economic Literature," CEE Discussion Papers 0006, Centre for the Economics of Education, LSE.
    27. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 3-22, Winter.
    28. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Darko Lazarov & Goce Petreski, 2016. "Human Capital as a Binding Constraint to Economic Growth: The Case of Macedonia," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 18(1), pages 35-70, June.
    2. Mirjana cizmovic & Jelena Jankovic & Milenko Popovic, 2015. "Growth Anatomy of Croatian Economy," Ekonomija Economics, Rifin d.o.o., vol. 22(1), pages 159-216.
    3. Milenko Popovic, 2007. "Rising Wage Inequality, Rate Of Return On Investment In Education, And Cost Of Education," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 3(5), pages 35-58.

    More about this item

    Keywords

    economic growth; human capital; education;

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:espost:82822. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics). General contact details of provider: http://edirc.repec.org/data/zbwkide.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.