Neoclassical growth models incorporating human capital tend to ignore some prominent features of the microeconomic labour literature, in particular: (i) the imperfect substitutability between skilled and unskilled workers; and (ii) unequal trends in the gains from technical changes across the labour force. This study investigates how the human capital aggregation and its parameters affect the results of a key piece of literature on the relevance of education for growth. The exercise consists in extending Bils and Klenow (2000)’s model to incorporate imperfect substitution among different levels of human capital and skill-specific technology terms. The results show that altering the human capital specification leads to diverging conclusions regarding the effect of schooling on human capital and technology. When technology is considered as affecting skilled and unskilled workers differently, and these workers are imperfect substitutes of each other, the rewards for education are intensified at the macroeconomic level.
Veridiana Nogueira, Department of Economics
Date & time:
6 Mar 2019 13:00 pm - 6 Mar 2019 14:00 pm
2N2.4.16 - ISER Large Seminar Room
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