Endogenous human capital formation, distance to frontier and growth

Sujata Basu () and Meeta Mehra ()

MPRA Paper from University Library of Munich, Germany

Abstract: We examine human capital's contribution to economy-wide technological progress through two channels -- imitation and innovation -- innovation being more skilled-intensive than innovation. We develop a growth model considering an endogenous ability-driven skill acquisition decision of an individual. We show that skilled labor is growth enhancing in the ``imitation-innovation" regime and the ``innovation-only" regime whereas unskilled labor is growth enhancing in the ``imitation-only" regime. Steady state exists and, in the long run, an economy may or may not converge to the world technology frontier, depending on its initial position and the growth rate of the frontier economy. In the diversified regime, technological progress raises the return to ability and generates an increase in wage inequality between and within groups -- consistent with the pattern observed across countries.

Keywords: Economic Growth; Endogenous Labor Composition; Imitation-Innovation; Convergence; Wage Inequality (search for similar items in EconPapers)
JEL-codes: I21 O3 O43 (search for similar items in EconPapers)
Date: 2011-07-14, Revised 2011-12-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Endogenous human capital formation, distance to frontier and growth (2014)
Working Paper: Endogeneous Human Capital Formation, Distance to Frontier and Growth
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:37701

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