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Knowledge = Technology + Human Capital and the Lucas and Romer Production Functions

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  • Amavilah, Voxi Heinrich

Abstract

The Lucas and Romer production functions are currently the two most popular descriptions of the new growth theories in which knowledge is endogenous to economic growth and technological change. However, in both production functions the relationship between technology and human capital is implicit, and human capital is measured as an area. The latter is inconsistent with common understanding by which knowledge can be deep and wide and evolving over and in time, meaning human capital is 3D. This paper takes human capital as being 3D and frames it in Lucas and Romer production functions. Both functions bunch knowledge together, i.e., human capital and technological knowledge are strictly inseparable. Analysis and intuition find that if we take human capital to be a volume, the Lucas production function is most appropriate for use at the micro-economic level where emphasis is on production knowledge. At the macroeconomic level the Romer production function appears more reasonable, as knowledge is far more than just production knowledge. A limitation of the paper is how to actually calculate human capital as a volume and then to estimate the production functions empirically. The limitation represents a fruitful direction for future research.

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  • Amavilah, Voxi Heinrich, 2014. "Knowledge = Technology + Human Capital and the Lucas and Romer Production Functions," MPRA Paper 58847, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:58847
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    5. Asongu, Simplice, 2015. "Rational Asymmetric Development: Transfer Mispricing and Sub-Saharan Africa’s Extreme Poverty Tragedy," MPRA Paper 71175, University Library of Munich, Germany.
    6. Simplice Asongu, 2015. "Rational Asymmetric Development: Transfer Pricing and Sub-Saharan Africa’s Extreme Poverty Tragedy," Working Papers of the African Governance and Development Institute. 15/017, African Governance and Development Institute..
    7. Simplice A. Asongu, 2015. "Rational Asymmetric Development: Transfer Mispricing and Sub-Saharan Africa’s Extreme Poverty Tragedy," Research Africa Network Working Papers 15/054, Research Africa Network (RAN).
    8. Simplice A. Asongu, 2015. "Rational Asymmetric Development: Transfer Pricing and Sub-Saharan Africa’s Extreme Poverty Tragedy," Research Africa Network Working Papers 15/017, Research Africa Network (RAN).

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    More about this item

    Keywords

    Knowledge; technology; 3D human capital; Lucas production function; Romer production function;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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