scholarly journals Endogenous Education and Long-Run Factor Shares

2021 ◽  
Vol 3 (2) ◽  
pp. 215-232
Author(s):  
Gene M. Grossman ◽  
Elhanan Helpman ◽  
Ezra Oberfield ◽  
Thomas Sampson
Keyword(s):  
Technological Progress ◽  
Overlapping Generations ◽  
National Income ◽  
Elasticity Of Substitution ◽  
Growth Path ◽  
Balanced Growth ◽  
Long Run ◽  
Balanced Growth Path ◽  
Factor Shares ◽  
Neoclassical Growth

We study the determinants of factor shares in a neoclassical environment with capital-skill complementarity and endogenous education. In this environment estimates of the elasticity of substitution between capital and labor that fail to account for human capital levels will be biased upward. We develop a model with overlapping generations, technology-driven neoclassical growth, and ongoing increases in educational attainment. For a class of production functions featuring 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. (JEL D33, E25, J24, O33)

scholarly journals Misallocation and Growth

2014 ◽  
Vol 104 (4) ◽  
pp. 1149-1171 ◽  
Author(s):  
Boyan Jovanovic
Keyword(s):  
Human Capital ◽  
Overlapping Generations ◽  
Normal Growth ◽  
Overlapping Generations Model ◽  
Balanced Growth ◽  
Long Run ◽  
Functional Forms ◽  
Balanced Growth Path ◽  
Log Normal ◽  
Constant Growth

This paper models growth via on-the-job learning when firms and workers are heterogeneous. It is an overlapping generations model in which young agents match with the old. More efficient assignments lead to faster long-run growth, more inequality, and less turnover in the distribution of human capital. Constant-growth paths are characterized for general functional forms and then, for the Cobb-Douglas case, the transition dynamics are solved analytically when the skill of the young is log-normally distributed and the initial human capital of the old generation is also log-normal. Growth and inequality move together on the transition to the balanced growth path. ( JEL D83, J24, J31, J41)

scholarly journals Balanced Growth Despite Uzawa

2017 ◽  
Vol 107 (4) ◽  
pp. 1293-1312 ◽  
Author(s):  
Gene M. Grossman ◽  
Elhanan Helpman ◽  
Ezra Oberfield ◽  
Thomas Sampson
Keyword(s):  
Capital Accumulation ◽  
Technological Progress ◽  
The United States ◽  
Investment Good ◽  
Growth Theorem ◽  
Neoclassical Growth Model ◽  
Balanced Growth ◽  
Balanced Growth Path ◽  
Endogenous Schooling ◽  
Neoclassical Growth

The evidence for the United States points to balanced growth despite falling investment-good prices and a less-than-unitary elasticity of substitution between capital and labor. This is inconsistent with the Uzawa Growth Theorem. We extend Uzawa's theorem to show that the introduction of human capital accumulation in the standard way does not resolve the puzzle. However, balanced growth is possible if education is endogenous and capital is more complementary with schooling than with raw labor. We present a class of aggregate production functions for which a neoclassical growth model with capital-augmenting technological progress and endogenous schooling converges to a balanced growth path. (JEL E22, E24, I26, J24, O33, O41, O47)

Effectiveness versus Efficiency: Growth-Accelerating Policies in a Model of Growth without Scale Effects

2006 ◽  
Vol 7 (3) ◽  
pp. 297-316 ◽  
Author(s):  
Bettina Büttner
Keyword(s):  
Human Capital ◽  
Capital Accumulation ◽  
Scale Effects ◽  
Growth Models ◽  
Human Capital Accumulation ◽  
Growth Path ◽  
Balanced Growth ◽  
Long Run ◽  
Theoretical Finding ◽  
Balanced Growth Path

Abstract Recent R&D growth models without strong scale effects imply that long-run growth rates depend only on parameters that are usually taken to be exogenous. However, integrating human capital accumulation into models of this type, Arnold (2002) demonstrates that subsidizing education accelerates growth. The present paper addresses welfare issues in Arnold’s model. The main theoretical finding of the paper is that a system of subsidies that implements the optimal balanced growth path as a decentralized equilibrium includes zero subsidies to education, while R&D activity should be either subsidized or taxed. To shed further light on the latter result, the model is calibrated and it turns out that along the balanced growth path, the decentralized economy underinvests in R&D, i.e. R&D activities should be subsidized.

scholarly journals The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment

2018 ◽  
Vol 108 (6) ◽  
pp. 1488-1542 ◽  
Author(s):  
Daron Acemoglu ◽  
Pascual Restrepo
Keyword(s):  
Capital Accumulation ◽  
New Technologies ◽  
Balanced Growth ◽  
Long Run ◽  
Rental Rate ◽  
Static Version ◽  
Balanced Growth Path ◽  
The Creation ◽  
The Cost ◽  
Factor Shares

We examine the concerns that new technologies will render labor redundant in a framework in which tasks previously performed by labor can be automated and new versions of existing tasks, in which labor has a comparative advantage, can be created. In a static version where capital is fixed and technology is exogenous, automation reduces employment and the labor share, and may even reduce wages, while the creation of new tasks has the opposite effects. Our full model endogenizes capital accumulation and the direction of research toward automation and the creation of new tasks. If the long-run rental rate of capital relative to the wage is sufficiently low, the long-run equilibrium involves automation of all tasks. Otherwise, there exists a stable balanced growth path in which the two types of innovations go hand-in-hand. Stability is a consequence of the fact that automation reduces the cost of producing using labor, and thus discourages further automation and encourages the creation of new tasks. In an extension with heterogeneous skills, we show that inequality increases during transitions driven both by faster automation and the introduction of new tasks, and characterize the conditions under which inequality stabilizes in the long run. (JEL D63, E22, E23, E24, J24, O33, O41)

ON THE DYNAMIC EFFICIENCY OF BALANCED GROWTH PATHS IN AN ENDOGENOUS GROWTH SETTING

2016 ◽  
Vol 21 (8) ◽  
pp. 1837-1856 ◽  
Author(s):  
Elena Del Rey ◽  
Miguel-Angel Lopez-Garcia
Keyword(s):  
Growth Rate ◽  
Endogenous Growth ◽  
Overlapping Generations ◽  
Physical Capital ◽  
Marginal Product ◽  
Dynamic Efficiency ◽  
Growth Path ◽  
Balanced Growth ◽  
Balanced Growth Path ◽  
Laissez Faire

In overlapping-generations economies with life-cycle saving and exogenous growth, the laissez-faire equilibrium balanced growth path fails in general to achieve optimality, but is dynamically efficient if the marginal product of physical capital is greater than the growth rate of the economy. In this paper, we accommodate the concept of dynamic (in)efficiency in an overlapping-generations economy with endogenous growth due to human capital accumulation. We show that the condition that the marginal product of physical capital is larger than the growth rate of the economy is necessary but no longer sufficient for the dynamic efficiency of the laissez-faire equilibrium balanced growth path.

scholarly journals CAN EDUCATION BE GOOD FOR BOTH GROWTH AND THE ENVIRONMENT?

2013 ◽  
Vol 17 (5) ◽  
pp. 1135-1157 ◽  
Author(s):  
Fabien Prieur ◽  
Thierry Bréchet
Keyword(s):  
Public Policy ◽  
Steady State ◽  
Overlapping Generations ◽  
Environmental Awareness ◽  
Sustainable Growth ◽  
Growth Path ◽  
Overlapping Generations Model ◽  
Balanced Growth ◽  
Knowledge Growth ◽  
Balanced Growth Path

We develop an overlapping-generations model of growth and the environment in relation to public policy on education. Beyond the traditional mechanisms through which knowledge, growth, and the environment interplay, we stress the role played by education in environmental awareness. Assuming first that environmental awareness is constant, we show the existence of a balanced-growth path (BGP) along which environmental quality increases continually. Then, if education enhances environmental awareness, the equilibrium properties are modified: the economy can reach a steady state or converge to an asymptotic BGP. Therefore, education does not necessarily promote sustained and sustainable growth.

scholarly journals COMPARISON OF CLOSED-FORM SOLUTIONS FOR THE LUCAS-UZAWA MODEL VIA THE PARTIAL HAMILTONIAN APPROACH AND THE CLASSICAL APPROACH

2017 ◽  
Vol 22 (4) ◽  
pp. 464-483 ◽  
Author(s):  
Rehana Naz ◽  
Azam Chaudhry
Keyword(s):  
Closed Form ◽  
First Integrals ◽  
Hamiltonian Approach ◽  
Growth Path ◽  
Three Solutions ◽  
Balanced Growth ◽  
Closed Form Solutions ◽  
Long Run ◽  
Balanced Growth Path ◽  
Special Case

In this paper we derive the closed-form solutions for the Lucas-Uzawa growth model with the aid of the partial Hamiltonian approach and then compare our results with those derived in literature. The partial Hamiltonian approach provides two first integrals [9] in the case where there are no parameter restrictions and these two first integrals are utilized to construct three sets of closed form solutions for all the variables in the model. We begin by using the two first integrals to find two closed form solutions, one of which is new to the literature. We then use only one of the first integrals to derive a third solution that is the same as that found in the previous literature. We continue by analyzing the newly derived solution in detail also show that all three solutions converge to the same long run balanced growth path. The special case when the share of capital is equal to the inverse of the intertemporal elasticity of substitution is also investigated in detail.

Economic Growth, Public Debt and Welfare: Comparing Three Budgetary Rules

2011 ◽  
Vol 12 (2) ◽  
pp. 205-222 ◽  
Author(s):  
Alfred Greiner
Keyword(s):  
Public Debt ◽  
Public Spending ◽  
Budget Constraint ◽  
Growth Path ◽  
Balanced Growth ◽  
Long Run ◽  
Endogenous Growth Model ◽  
Balanced Growth Path ◽  
Balanced Budget ◽  
Elastic Labor Supply

Abstract We present an endogenous growth model with externalities of capital and elastic labor supply where we allow for public debt and welfare-enhancing public spending. We analyze different debt policies as regards convergence to a balanced growth path and their effects on long-run growth and welfare. Three budgetary rules are considered: the balanced budget rule, a budgetary rule where debt grows in the long run but at a rate lower than the balanced growth rate and a rule where public debt grows at the same rate as all other economic variables but where it guarantees that the intertemporal budget constraint is fulfilled.

scholarly journals RANDOM MATCHING AND MONEY IN THE NEOCLASSICAL GROWTH MODEL: SOME ANALYTICAL RESULTS

2011 ◽  
Vol 15 (S2) ◽  
pp. 293-312 ◽  
Author(s):  
Christopher J. Waller
Keyword(s):  
Closed Form ◽  
Growth Model ◽  
Growth Path ◽  
Interest Rate Policy ◽  
Neoclassical Growth Model ◽  
Balanced Growth ◽  
Closed Form Solutions ◽  
Monetary Economy ◽  
Balanced Growth Path ◽  
Neoclassical Growth

I use the monetary version of the neoclassical growth model developed by Aruoba, Waller, and Wright [Journal of Monetary Economics (2011)] to study the properties of the model when there is exogenous growth. I first consider the planner's problem, and then the equilibrium outcome in a monetary economy. I do so by first using proportional bargaining to determine the terms of trade and then considering competitive price taking. I obtain closed-form solutions for all variables along the balanced growth path in all cases. I then derive closed-form solutions for the transition paths under the assumption of full depreciation and, in the monetary economy, a particular nonstationary interest rate policy. The key result is that inflation is damaging to per capita income levels along the balanced growth path and to short-run growth of the economy.

scholarly journals Golden-Rule Level of the Employment

2017 ◽  
Vol 01 (01) ◽  
pp. 1740005 ◽  
Author(s):  
Yong Tao ◽  
Xiangjun Wu
Keyword(s):  
Production Function ◽  
Golden Rule ◽  
Perfect Competition ◽  
Growth Path ◽  
Aggregate Production ◽  
Balanced Growth ◽  
Aggregate Production Function ◽  
Long Time ◽  
Balanced Growth Path ◽  
General Equilibria

The competitive economy, over a long time scale, would produce a large number of general equilibria, each of which can be regarded as a possible microstate of this economy. Then by the principle of maximum entropy, we can obtain the most probable macrostate which in the case of perfect competition involving a single industry will lead to a Solow-type aggregate production function. By this aggregate production function, one can make clear how labors match firms on the balanced growth path. Here, we prove that when the capital stock of a society arrives at the golden-rule level on the balanced growth path, the social employment will reach the best level at which every firm on average employs an optimal amount of workers.

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