The Knowledge Trap: Human Capital and Development Reconsidered

Benjamin Jones

No 14138, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper presents a model where human capital differences - rather than technology differences - can explain several central phenomena in the world economy. The results follow from the educational choices of workers, who decide not just how long to train, but also how broadly. A "knowledge trap" occurs in economies where skilled workers favor broad but shallow knowledge. This simple idea can inform cross-country income differences, international trade patterns, poverty traps, and price and wage differences across countries in a manner broadly consistent with existing empirical evidence. The model also provides insights about the brain drain, migration, and the role for multinationals in development. More generally, this paper shows that standard human capital accounting methods can severely underestimate the role of education in development. It shows how endogenous educational decisions can replace exogenous technology differences in a range of economic reasoning.

JEL-codes: F22 F23 I20 J24 J31 O11 O15 (search for similar items in EconPapers)
Date: 2008-06
New Economics Papers: this item is included in nep-dev, nep-hrm, nep-knm and nep-lab
Note: ED EFG PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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