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Human Capital Composition, Growth and Development in an R&D Endogenous Growth Model

  • Tiago Neves Sequeira

    (U Nova de Lisboa & U Beira Interior)

The effect of human capital on growth and development has been somewhat neglected in economic literature. However, evidence has suggested the importance of engineering and technical skills to economic growth. Simultaneously, European Commission and OECD has presented data that reveal the shortage of these fields of science in developed countries. Using a standard increasing-variety endogenous growth model, we propose various measures of this composition, namely the ratio of high-tech to total human capital and the ratio of high to low-tech human capital. We show that allocation matters in what growth and development are concerned. We also show that the decentralized equilibrium leads to less investment in high-techs than does the social planner and the tendency to under-invest in R&D is expanded under the presence of human capital composition. When compared to data, the model does well in explaining the rate of growth and the level of development (less robustly) as a function of these measures.

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File URL: http://128.118.178.162/eps/mac/papers/0310/0310015.pdf
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Paper provided by EconWPA in its series Macroeconomics with number 0310015.

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Length: 48 pages
Date of creation: 18 Oct 2003
Date of revision:
Handle: RePEc:wpa:wuwpma:0310015
Note: Type of Document - pdf; prepared on win98; pages: 48
Contact details of provider: Web page: http://128.118.178.162

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  1. Robert J. Barro, 2001. "Human Capital and Growth," American Economic Review, American Economic Association, vol. 91(2), pages 12-17, May.
  2. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
  3. Jones, Charles I, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 495-525, May.
  4. Barro, Robert J, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 407-43, May.
  5. Ricardo J. Caballero & Adam B. Jaffe, 1993. "How High are the Giants' Shoulders: An Empirical Assessment of Knowledge Spillovers and Creative Destruction in a Model of Economic Growth," NBER Chapters, in: NBER Macroeconomics Annual 1993, Volume 8, pages 15-86 National Bureau of Economic Research, Inc.
  6. Iyigun, Murat F & Owen, Ann L, 1999. " Entrepreneurs, Professionals, and Growth," Journal of Economic Growth, Springer, vol. 4(2), pages 213-32, June.
  7. Gary S. Becker & Kevin M. Murphy & Robert Tamura, . "Human Capital, Fertility, and Economic Growth," University of Chicago - Population Research Center 90-5a, Chicago - Population Research Center.
  8. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1990. "The Allocation of Talent: Implicationsfor Growth," University of Chicago - George G. Stigler Center for Study of Economy and State 65, Chicago - Center for Study of Economy and State.
  9. Michael Funke & Holger Strulik, 2000. "On Endogenous Growth with Physical Capital, Human Capital and Product Variety," Quantitative Macroeconomics Working Papers 20004, Hamburg University, Department of Economics.
  10. Jonathan Temple & Hans-Joachim Voth, 1996. "Human capital, equipment investment, and industrialization," Economics Papers 22 & 116, Economics Group, Nuffield College, University of Oxford.
  11. Acemoglu, Daron, 2001. "Good Jobs versus Bad Jobs," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 1-21, January.
  12. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  13. Crafts, N. F. R., 1995. "Exogenous or Endogenous Growth? The Industrial Revolution Reconsidered," The Journal of Economic History, Cambridge University Press, vol. 55(04), pages 745-772, December.
  14. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
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