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Micro Evidence on Human Capital as the Engine of Growth

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  • Trostel, Philip A.

Abstract

This study examines a crucial assumption in much of the recent work on endogenous growth, namely, constant returns to scale in the production of human capital. A simple model is constructed to show that the returns to scale in human capital production can be inferred from the relationship between the wage rate and years of schooling. A large international micro dataset is used to estimate this relationship. The empirical evidence is decisive. There are decreasing returns to scale in human capital production; that is, the micro-level evidence is not supportive of endogenous growth driven by human capital accumulation.

Suggested Citation

  • Trostel, Philip A., 2000. "Micro Evidence on Human Capital as the Engine of Growth," Economic Research Papers 269306, University of Warwick - Department of Economics.
  • Handle: RePEc:ags:uwarer:269306
    DOI: 10.22004/ag.econ.269306
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    More about this item

    Keywords

    Agricultural and Food Policy; Labor and Human Capital; Production Economics;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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