Endogenous education and long-run factor shares

Gene Grossman, Elhanan Helpman, Ezra Oberfield and Thomas Sampson

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We study the determinants of factor shares in a neoclassical environment with capital-skill complementarity and endogenous education. In this environment estimates of the elasticity of substitution between capital and labor that fail to account for human capital levels will be biased upward. We develop a model with overlapping generations, technology-driven neoclassical growth, and ongoing increases in educational attainment. For a class of production functions featuring capital-skill complementarity, a balanced growth path exists and is characterized by an inverse relationship between the rates of capital-and labor-augmenting technological progress and the capital share in national income.

Keywords: neoclassical growth; balanced growth; human capital; education; technological progress; capital-skill complementarity; capital share; labor share (search for similar items in EconPapers)
JEL-codes: E25 J24 O41 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2021-06-01
New Economics Papers: this item is included in nep-dge, nep-gro, nep-isf and nep-mac
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Citations: View citations in EconPapers (5)

Published in American Economic Review: Insights, 1, June, 2021, 3(2), pp. 215 - 232. ISSN: 2640-205X

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http://eprints.lse.ac.uk/106968/ Open access version. (application/pdf)

Related works:
Journal Article: Endogenous Education and Long-Run Factor Shares (2021)
Working Paper: Endogenous Education and Long-Run Factor Shares (2020)
Working Paper: Endogenous Education and Long-Run Factor Shares (2020)
Working Paper: Endogenous Education and Long-Run Factor Shares (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:106968

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