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The Mystery of Human Capital as Engine of Growth, or Why the US Became the Economic Superpower in the 20th Century

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  • Isaac Ehrlich

Abstract

This paper offers a thesis as to why the US overtook the UK and other European countries in the 20th century in both aggregate and per-capita GDP, as a case study of recent models of endogenous growth where human capital is the "engine of growth". The conjecture is that the ascendancy of the US as an economic superpower owes in large measure to its relatively faster human capital formation. Whether the thesis has legs to stand on is assessed through stylized facts indicating that the US led other OECD countries in schooling attainments per adult population over the 20 century, especially at the secondary and tertiary levels. While human capital is viewed as the direct facilitator of growth, the underlying factors driving the US ascendancy are linked to the superior returns the political-economic system in the US has so far offered individual human capital attainments, both home-produced and imported.

Suggested Citation

  • Isaac Ehrlich, 2007. "The Mystery of Human Capital as Engine of Growth, or Why the US Became the Economic Superpower in the 20th Century," NBER Working Papers 12868, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:12868
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    References listed on IDEAS

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    1. Gary S. Becker & Kevin M. Murphy & Robert Tamura, 1994. "Human Capital, Fertility, and Economic Growth," NBER Chapters,in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 323-350 National Bureau of Economic Research, Inc.
    2. Hartog,Joop & Maassen van den Brink,Henriëtte (ed.), 2007. "Human Capital," Cambridge Books, Cambridge University Press, number 9780521873161, April.
    3. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
    4. Barro, Robert J. & Lee, Jong-Wha, 1993. "International comparisons of educational attainment," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 363-394, December.
    5. Isaac Ehrlich & Yong Yin, 2005. "Explaining Diversities in Age-Specific Life Expectancies and Values of Life Saving: A Numerical Analysis," Journal of Risk and Uncertainty, Springer, vol. 31(2), pages 129-162, September.
    6. Isaac Ehrlich & Jinyoung Kim, 2007. "The Evolution of Income and Fertility Inequalities over the Course of Economic Development: A Human Capital Perspective," Journal of Human Capital, University of Chicago Press, vol. 1(1), pages 137-174.
    7. Ehrlich, Isaac & Lui, Francis T, 1991. "Intergenerational Trade, Longevity, and Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 1029-1059, October.
    8. Isaac Ehrlich & Francis T. Lui, 1999. "Bureaucratic Corruption and Endogenous Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 270-293, December.
    9. 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.
    10. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2003. "Fifty Years of Mincer Earnings Regressions," NBER Working Papers 9732, National Bureau of Economic Research, Inc.
    11. Goldin, Claudia, 2001. "The Human-Capital Century And American Leadership: Virtues Of The Past," The Journal of Economic History, Cambridge University Press, vol. 61(02), pages 263-292, June.
    12. Isaac Ehrlich & Jinyoung Kim, 2005. "Social Security, Demographic Trends, and Economic Growth: Theory and Evidence from the International Experience," NBER Working Papers 11121, National Bureau of Economic Research, Inc.
    13. Isaac Ehrlich & Kevin M. Murphy, 2007. "Why Does Human Capital Need a Journal?," Journal of Human Capital, University of Chicago Press, vol. 1(1), pages 1-7.
    14. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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    Cited by:

    1. Joseph P. Kaboski & Trevon D. Logan, 2011. "Factor Endowments and the Returns to Skill: New Evidence from the American Past," Journal of Human Capital, University of Chicago Press, vol. 5(2), pages 111-152.
    2. Messinis, George & Ahmed, Abdullahi D., 2013. "Cognitive skills, innovation and technology diffusion," Economic Modelling, Elsevier, vol. 30(C), pages 565-578.

    More about this item

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • I2 - Health, Education, and Welfare - - Education
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • N3 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy
    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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