Endogenous Education and Long-Run Factor Shares
| Autor: | Gene M. Grossman, Ezra Oberfield, Elhanan Helpman, Thomas Sampson |
|---|---|
| Rok vydání: | 2021 |
| Předmět: |
HB Economic Theory
Factor shares Elasticity of substitution media_common.quotation_subject 05 social sciences HC Economic History and Conditions Monetary economics Overlapping generations model Human capital Interest rate Physical capital 0502 economics and business Marginal product Economics General Earth and Planetary Sciences Wage share 050207 economics 050205 econometrics General Environmental Science media_common |
| Zdroj: | American Economic Review: Insights. 3:215-232 |
| ISSN: | 2640-2068 2640-205X |
| DOI: | 10.1257/aeri.20200350 |
| Popis: | We study the determinants of factor shares in a neoclassical environment with capital- skill complementarity and endogenous education. When more physical capital raises the marginal product of skills relative to that of raw labor, an increase in a broad measure of embodied human capital raises the capital share in national income for any given rental rate. When education is chosen optimally, a dynamic equilibrium is characterized by an inverse relationship between the level of human capital and both the rental rate on capital and the difference between the interest rate and the growth rate of wages. As a consequence, estimates of the elasticity of substitution that fail to account for levels of human capital will be biased upward. We develop a model with overlapping generations, ongoing increases in educational attainment, and technology-driven neoclassical growth, and show that for a class of production functions with capital-skill complementarity, a balanced growth path exists and is characterized by an inverse relationship between the rates of capital- and labor-augmenting technological progress and the capital share in national income. |
| Databáze: | OpenAIRE |
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