Abstract
Based on Lucas (1988) human capital model, our paper introduces Romer (1986) the concept of learning by doing and tries to establish an endogenous growth model under a closed economic system, so as to explore the impact on the long-term economic growth rate under the consideration of learning by doing effect and human capital accumulation. We found that when the consumption intertemporal elasticity of substitution is equal to 1, the growth rate of human capital will show a fixed growth; when the consumption intertemporal elasticity of substitution isn’t equal to 1, we have a higher growth rate of human capital. In terms of economic growth rate, regardless of the value of consumption intertemporal elasticity of substitution, we can get a higher economic growth rate. It shows that learning by doing and human capital has a positive effect on the economic growth rate. Even if the human capital growth rate shows a fixed growth, the learning by doing effect can also promote the long-term economic growth rate of the system.
Highlights
Since the middle and late 1980s, endogenous economic growth theory has become an important research topic in the macroeconomic field
In terms of economic growth rate, regardless of the value of consumption intertemporal elasticity of substitution, we can get a higher economic growth rate. It shows that learning by doing and human capital has a positive effect on the economic growth rate
Our paper attempts to establish a theoretical model of endogenous economic growth by combining the learning by doing effect and human capital accumulation to explore the long run economic growth rate of the economic system
Summary
Since the middle and late 1980s, endogenous economic growth theory has become an important research topic in the macroeconomic field. Romer (1986) considers that the employees in the production process exist the learning by doing effect. It means that employees will gradually master the required skills as they work and keep their working experience. This will improve the productivity of employees, increase corporate profits and drive economic growth. The accumulation of human capital can improve the output level of the enterprise and promote the long run economic growth rate. Our paper attempts to establish a theoretical model of endogenous economic growth by combining the learning by doing effect and human capital accumulation to explore the long run economic growth rate of the economic system. Our results will be compared and analyzed with Lucas (1988)
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