Endogenous human capital formation, distance to frontier and growth

Sujata Basu () and Meeta Mehra ()

Research in Economics, 2014, vol. 68, issue 2, 117-132

Abstract: We examine human capital's contribution to economy-wide technological progress through two channels – imitation and innovation – innovation being more skill-intensive than imitation. We develop a growth model based on the endogenous ability-driven skill acquisition decision of an individual. It is shown that skilled human capital is growth enhancing in the “imitation-innovation” regime and in the “innovation-only” regime whereas unskilled human capital is growth enhancing in the “imitation-only” regime. Steady state exists and, in the long run, the economy converges to the world technology frontier. In the diversified regime, technological progress raises the return to ability and generates an increase in wage inequality between and within groups – consistent with the pattern observed across countries.

Keywords: Economic growth; Endogenous labor composition; Imitation–innovation; Convergence; Wage inequality (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Endogenous human capital formation, distance to frontier and growth (2011)
Working Paper: Endogeneous Human Capital Formation, Distance to Frontier and Growth
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:68:y:2014:i:2:p:117-132

DOI: 10.1016/j.rie.2013.11.002

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