Technology, Skill and Long Run Growth

Nancy L Stokey
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Nancy L Stokey: Department of Economics

No 199, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: This paper develops a model in which heterogeneous firms invest in technology to increase their profits, and heterogeneous workers invest in human capital to increase their earnings. Production functions are log supermodular in technology and human capital, so the competitive equilibrium features positively assortative matching between firms and workers. Continued investment in technology is profitable only because human capital is growing, and continued investment in human capital is worthwhile only because technology is growing. Both investment technologies have stochastic components, and the balanced growth path has stationary, nondegenerate distributions of technology and human capital, with both growing at a common, constant rate.

Date: 2017
New Economics Papers: this item is included in nep-dge, nep-gro and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed017:199

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