Estimated human capital externalities in an endogenous growth framework
Jim Malley () and
No 7603, CESifo Working Paper Series from CESifo Group Munich
To better understand the quantitative implications of human capital externalities at the aggregate level, we estimate a two-sector endogenous growth model with knowledge spill-overs. To achieve this, we account for trend growth in a model consistent fashion and employ a Markov-chain Monte-Carlo (MCMC) algorithm to estimate the model's posterior parameter distributions. Using U.S. quarterly data from 1964-2017, we find significant positive externalities to aggregate human capital. Our analysis further shows that eliminating this market failure leads to sizeable increases in education-time, endogenous growth and aggregate welfare.
Keywords: human capital externalities; endogenous growth; Bayesian estimation (search for similar items in EconPapers)
JEL-codes: C11 C52 E32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gro, nep-knm and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_7603
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