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Micro Evidence on Human Capital as the Engine of Growth

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  • Trostel, P.A.

Abstract

This study examines a crucial assumption in much of the recent work on endogenous growth, namely, constant returns to scale in the production of human capital. A simple model is constructed to show that the returns to scale in human capital production can be inferred from the relationship between the wage rate and years of schooling. A large international micro dataset is used to estimate this relationship. The empirical evidence is decisive. There are decreasing returns to scale in human capital production; that is, the micro-level evidence is not supportive of endogenous growth driven by human capital accumulation.

Suggested Citation

  • Trostel, P.A., 2000. "Micro Evidence on Human Capital as the Engine of Growth," The Warwick Economics Research Paper Series (TWERPS) 555, University of Warwick, Department of Economics.
  • Handle: RePEc:wrk:warwec:555
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    File URL: https://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/twerp555.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    GROWTH RATE ; PRODUCTION ; HUMAN CAPITAL;

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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