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Human Capital's Contribution to Japan's Lost Decades

Author

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  • Theodore Breton

Abstract

I use a dynamic Solow growth model, augmented with human capital, labor-hours, and oil prices, to show that Japan’s growth in GDP/adult over 1969-2007 can be explained as a process of convergence to a world steady-state rate of 1%/year. I find that each additional year of average schooling attainment during this period raised GDP/adult in Japan by 20 percent, which raised the annual growth rate by 1.8% in 1969, but by only 0.6% in 2007. I also show that redirecting national investment from physical capital to post-secondary schooling would be a cost-effective strategy to raise growth rates.

Suggested Citation

  • Theodore Breton, 2013. "Human Capital's Contribution to Japan's Lost Decades," Documentos de Trabajo de Valor Público 10570, Universidad EAFIT.
    • Handle: RePEc:col:000122:010570
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    More about this item

    Keywords

    Japan; Human Capital; Schooling; Productivity; Economic Growth; Convergence;
    All these keywords.

    JEL classification:

    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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