From Physical to Human Capital Accumulation with Pollution

Takumi Motoyama ()
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Takumi Motoyama: Graduate School of Economics, Osaka University

No 16-03, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

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.

Keywords: Semiconductor Human capital; Pollution; Resource curse (search for similar items in EconPapers)
JEL-codes: I15 O13 Q52 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2016-03
New Economics Papers: this item is included in nep-dge, nep-ene, nep-env, nep-gro and nep-res
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Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:1603

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