A Human Capital Theory of Structural Transformation

Max Gillman

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: The paper presents a human capital based theory of the sectoral transformation along the balanced growth path equilibrium. Allowing a small upward trend in the productivity of the human capital sector, combined with di§erential human capital intensity and constant productivity across sectors, output gradually shifts over time from relatively less human capital intensive sectors towards more human capital intensive sectors. Sectors intensive in the factor that is becoming relatively more plentiful find their relative prices falling, their "effective productivities" rising at di§erential rates inversely to their relative price decline, and their relative outputs expanding. Adding more sectors of greater human capital intensity causes labor time to decrease across existing sectors, and by relatively more in the least human capital sectors. literature.

Keywords: human capital intensity; sectoral allocation; labor shares; productivity; technological change; neoclassical; optimal growth model (search for similar items in EconPapers)
JEL-codes: E13 J24 O11 O14 O33 O41 (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-gro, nep-hrm, nep-ino, nep-lma, nep-mac and nep-tid
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