The Human Capital Constraint: Of Increasing Returns, Education Choice and Coordination Failure

Shekhar Aiyar ()

The B.E. Journal of Macroeconomics, 2003, vol. topics.3, issue 1

Abstract: If technological innovations in the North can be costlessly imitated by educated workers in the South, and if education decisions are endogenous, why aren't all countries well-educated and rich? This paper explores a possible answer: if technologically advanced sectors, operating under increasing returns to scale, need a minimum pool of educated workers to commence production, then coordination failure can arise in the choice of education. A simple two-sector model is shown to yield multiple equilibria: countries that perform well educationally and adopt technology successfully can co-exist with countries that fail in both endeavors.

Keywords: Increasing Returns; Education Choice; Coordination Failure (search for similar items in EconPapers)
JEL-codes: I20 I28 J24 O10 O30 (search for similar items in EconPapers)
Date: 2003

Downloads: (external link)
http://www.bepress.com/cgi/viewcontent.cgi?article=1071&context=bejm (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:bpj:bejmac:v:topics.3:y:2003:i:1:n:2

Access Statistics for this article

More articles in The B.E. Journal of Macroeconomics from Berkeley Electronic Press
Series data maintained by Avi Warner ().