Should a Country Invest more in Human or Physical Capital? A Two-Sector Endogenous Growth Approach
Marion Davin (),
Karine Gente () and
Carine Nourry
Working Papers from HAL
Abstract:
Should a country invest more in human or physical capital? The present paper addresses this issue, considering the impact of different factor intensities between sectors on both optimal human and physical capital accumulation. Using a two-sector overlapping generations setting with endogenous growth driven by human capital accumulation, we prove that relative factor intensity between sectors drastically shapes the welfare analysis: two laissez-faire economies with the same global capital share may generate physical capital excess or scarcity, with respect to the optimum. The model for the Japanese economy, that experienced a factor intensity reversal after the oil shock, is then calibrated. It is shown that Japan invested relatively too much in human capital before 1975, but has not invested enough since 1990.
Keywords: factor intensity differential; endogenous growth; social optimum; two-sector model (search for similar items in EconPapers)
Date: 2013-05
New Economics Papers: this item is included in nep-dge, nep-fdg and nep-hrm
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00822391
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
https://shs.hal.science/halshs-00822391/document (application/pdf)
Related works:
Working Paper: Should a Country Invest more in Human or Physical Capital? A Two-Sector Endogenous Growth Approach (2013) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:halshs-00822391
Access Statistics for this paper
More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().