Balanced growth despite Uzawa

Gene Grossman, Elhanan Helpman, Ezra Oberfield and Thomas Sampson

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The evidence for the United States points to balanced growth despite falling investment-good prices and a less-than-unitary elasticity of substitution between capital and labor. This is inconsistent with the Uzawa Growth Theorem. We extend Uzawa's theorem to show that the introduction of human capital accumulation in the standard way does not resolve the puzzle. However, balanced growth is possible if education is endogenous and capital is more complementary with schooling than with raw labor. We present a class of aggregate production functions for which a neoclassical growth model with capital-augmenting technological progress and endogenous schooling converges to a balanced growth path.

Keywords: neoclassical growth; balanced growth; technological progress; capital-skill complementarity (search for similar items in EconPapers)
JEL-codes: N0 (search for similar items in EconPapers)
Date: 2017-04-01
New Economics Papers: this item is included in nep-ino
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Citations: View citations in EconPapers (33)

Published in American Economic Review, 1, April, 2017, 107(4), pp. 1293-1312. ISSN: 0002-8282

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http://eprints.lse.ac.uk/68310/ Open access version. (application/pdf)

Related works:
Journal Article: Balanced Growth Despite Uzawa (2017)
Working Paper: Balanced growth despite Uzawa (2016)
Working Paper: Balanced Growth Despite Uzawa (2016)
Working Paper: Balanced Growth Despite Uzawa (2016)
Working Paper: Balanced growth despite Uzawa (2016)
Working Paper: Balanced Growth Despite Uzawa (2016)
Working Paper: Balanced Growth Despite Uzawa (2016)
Working Paper: Balanced Growth Despite Uzawa (2016)
Working Paper: Balanced Growth Despite Uzawa
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