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The Knowledge Trap: Human Capital and Development Reconsidered

  • Benjamin F. Jones
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    This paper presents a model where human capital differences - rather than technology differences - can explain several central phenomena in the world economy. The results follow from the educational choices of workers, who decide not just how long to train, but also how broadly. A "knowledge trap" occurs in economies where skilled workers favor broad but shallow knowledge. This simple idea can inform cross-country income differences, international trade patterns, poverty traps, and price and wage differences across countries in a manner broadly consistent with existing empirical evidence. The model also provides insights about the brain drain, migration, and the role for multinationals in development. More generally, this paper shows that standard human capital accounting methods can severely underestimate the role of education in development. It shows how endogenous educational decisions can replace exogenous technology differences in a range of economic reasoning.

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    File URL: http://www.nber.org/papers/w14138.pdf
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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14138.

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    Date of creation: Jun 2008
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    Handle: RePEc:nbr:nberwo:14138
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    2. Caselli, Francesco, 2005. "Accounting for Cross-Country Income Differences," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, pages 679-741 Elsevier.
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    8. Benjamin F. Jones, 2005. "The burden of knowledge and the ‘death of the Renaissance man’: Is innovation getting harder?," Proceedings, Federal Reserve Bank of San Francisco.
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    27. repec:oup:restud:v:64:y:1997:i:3:p:445-64 is not listed on IDEAS
    28. Michael Kremer, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 551-575.
    29. Daron Acemoglu, 1996. "A Microfoundation for Social Increasing Returns in Human Capital Accumulation," The Quarterly Journal of Economics, Oxford University Press, vol. 111(3), pages 779-804.
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