Should a country invest more in human or physical capital?

Marion Davin (), Karine Gente () and Carine Nourry

Mathematical Social Sciences, 2015, vol. 76, issue C, 44-52

Abstract: Should a country invest more in human or physical capital? Using a two-sector overlapping generations setting with endogenous growth driven by human capital accumulation, we prove that relative factor intensity between sectors drastically shapes the welfare analysis: two identical laissez-faire economies with different sectoral capital shares may generate physical capital excess or scarcity, with respect to the optimum. The design of optimal policy depends on the sectoral properties and the social planner discount rate.

Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:76:y:2015:i:c:p:44-52

DOI: 10.1016/j.mathsocsci.2015.04.003

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