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Estimated human capital externalities in an endogenous growth framework

Jim Malley () and Ulrich Woitek

No 7603, CESifo Working Paper Series from CESifo Group Munich

Abstract: 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
Date: 2019
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