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From Physical to Human Capital Accumulation with Pollution

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  • Takumi Motoyama

    (Graduate School of Economics, Osaka University)

Abstract

This study examines the process of economic development in an overlapping generations model where higher physical capital involves pollution and deteriorates the productivity of education. In this setting, households may not invest into education and multiple steady states of the physical/human capital ratio can arise, leading long-run production with low initial endowment (physical capital) to be higher than that with high initial endowment. This occurs because, owing to the low productivity of education caused by pollution, only physical capital accumulation occurs with high initial endowment, while physical and human capital accumulation occur with low initial endowment. This result is consistent with the resource curse. We also show that higher abatement technology can solve the resource curse problem since it helps households redirect physical capital accumulation toward human capital accumulation.

Suggested Citation

  • Takumi Motoyama, 2016. "From Physical to Human Capital Accumulation with Pollution," Discussion Papers in Economics and Business 16-03, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:1603
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    References listed on IDEAS

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    More about this item

    Keywords

    Semiconductor Human capital; Pollution; Resource curse;
    All these keywords.

    JEL classification:

    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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