TECHNOLOGY, TRADE, AND GROWTH: THE ROLE OF EDUCATION

Klaus Prettner and Holger Strulik

Macroeconomic Dynamics, 2016, vol. 20, issue 5, 1381-1394

Abstract: We generalize a trade model with firm-specific heterogeneity and R&D-based growth to allow for endogenous education and fertility. The framework is able to explain cross-country differences in living standards and trade intensities by the differential pace of human capital accumulation among industrialized countries. Consistent with the empirical evidence, scale matters for relative economic prosperity as long as countries are closed, whereas scale does not matter in a fully globalized world. The average human capital of a country, by contrast, influences its relative economic prosperity irrespective of trade-openness.

Date: 2016
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Working Paper: Technology, trade, and growth: The role of education (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:cup:macdyn:v:20:y:2016:i:05:p:1381-1394_00

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