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Endogeneous Human Capital Formation, Distance to Frontier and Growth

Author

Listed:
  • Sujata Basu

    (Centre for International Trade and development)

  • Meeta Keswani Mehra

    (Centre for International Trade and development)

Abstract
We examine human capital's contribution to economy-wide technological progress through two channels { im- itation 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 diversi ed 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.

Suggested Citation

  • Sujata Basu & Meeta Keswani Mehra, "undated". "Endogeneous Human Capital Formation, Distance to Frontier and Growth," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 12-01, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
    • Handle: RePEc:ind:citdwp:12-01
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    Cited by:

    1. Anshuman Kamila & Meeta Keswani Mehra, 2021. "EXPLORING THE CONVERGENCE PUZZLE IN INDIA Combining neoclassical and endogenous models to understand growth experience of Indian states," IEG Working Papers 421, Institute of Economic Growth.
    2. Swati Saini & Meeta Keswani Mehra, "undated". "Quality of Schooling: Child Quantity-Quality Tradeoff, Technological Progress and Economic Growth," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 18-06, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
    3. Sujata Basu, "undated". "R & D Sector Outsourcing, Human Capital Formation and Growth in the Context of Developed versus Developing Economies," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 15-05, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
    4. Meeta Keswani Mehra & Swati Saini, 2020. "Implications of Quality of Schooling on Economic Growth and Convergence – A System Dynamics Perspective," Global Economic Review, Taylor & Francis Journals, vol. 49(1), pages 97-126, January.
    5. Amavilah, Voxi Heinrich, 2014. "Human Knowledge and a Commonsensical Measure of Human Capital: A Proposal," MPRA Paper 57670, University Library of Munich, Germany.
    6. Almeida, Carlo Alano Soares de & Fernandes, Kaio César & Oliveira, Denison Murilo de & Rocha, Leonardo Andrade & Silva, Napiê Galvê Araújo, 2020. "Growth and heterogeneity of human capital: effects of the expansion of higher education on the income increase in Brazilian municipalities," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    7. Stephen Oluwatobi & Oluyomi Ola-David & Isaiah Olurinola & Philip Alege & Adeyemi Ogundipe, 2016. "Human Capital, Institutions and Innovation in Sub-Saharan Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 6(4), pages 1507-1514.
    8. Tanaka Masashi, 2020. "Changing demand for general skills, technological uncertainty, and economic growth," The B.E. Journal of Macroeconomics, De Gruyter, vol. 20(1), pages 1-25, January.
    9. Basu, Suajta, 2014. "Intergenerational mobility, composition of human capital and distance to frontier," MPRA Paper 59110, University Library of Munich, Germany.

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    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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