Endogenous Human Capital Research Articles

Factors of economic development in the periphery of the Isthmus of Tehuantepec Interoceanic Corridor

The endogenous, human, and social factors influencing the economic development of the municipalities of San Juan Cotzocón and San Pedro y San Pablo Ayutla in the Istmo de Tehuantepec region of the state of Oaxaca are analyzed. The hypothesis posits that the dimensions of endogenous development, social capital, and human capital directly impact the economic development of the respective municipalities. The study involved administering 262 questionnaires to the residents of these municipalities during the month of May 2023. The collected data were examined using exploratory factor analysis to determine the underlying structure and structural equation modeling to estimate the effects and relationships between variables. Results indicate that endogenous development, social capital, and human capital are factors in the economic development of the studied communities, with endogenous development being the most influential factor due to its statistical significance. Notably, the existence of tourist and cultural attractions in the municipalities emerges as a catalyst for local economic development in response to the establishment and operation of the Isthmus of Tehuantepec Interoceanic Corridor.

Optimal taxation in the life cycle with human capital investment

This paper studies optimal taxes in a lifecycle model with unverifiable human capital investment inseparable from regular consumption. The planner faces asymmetric information regarding agents’ exogenous abilities and endogenous human capital. Agents deviate in two ways: misreporting ability and mis-investing in human capital. We characterize the distortions in a model with i.i.d. shocks and full human capital depreciation. Distortions are characterized by capital wedges that are positive over the life cycle, labor wedges that are negative early and positive later in the life cycle, and net human capital wedges that are positive in the life cycle. These wedges serve as mechanisms to eliminate the distortion to consumption due to inseparability from education expenditure. Calibrate to U.S. data, we show numerically that these results apply in a richer model with persistent shocks and non-full human capital depreciation. Simulation suggests that average capital wedges are positive in all working periods, with progressive capital wedges in contemporary skills, average labor wedges are negative in early and positive in later periods, with hump-shape in skills and nonzero at the top and the bottom of the skill distribution, and net human capital wedges are positive and regressive in skills, indicating that human capital subsidies are in favor of the high skilled.

Monetary Policy in a Schumpeterian Economy with Endogenous Fertility and Human Capital Accumulation

Monetary Policy in a Schumpeterian Economy with Endogenous Fertility and Human Capital Accumulation

Endogenous Growth and Human Capital: A Comparative Study of Pakistan and Sri Lanka

Economic Growth has posed an intellectual challenge ever since the beginning of systematic economic analysis. Adam Smith claimed that growth was related to division of labour, but he did not link them in a clear way. After that Thomas Malthus developed a formal model of a dynamic economic growth process in which each country converge toward stationary per-capita income. According to this model, death rates fall and fertility rises when income exceed the equilibrium, and opposite occur when incomes are less than that level. Despite the influence of the Malthusian model in nineteenth century economists, fertility fell rather than rose as income grew during the past 150 years in the west and other parts of the world.

Physical and human capital, fertility, and childcare services

We shed light on a nexus between fertility transitions and economic growth patterns. We construct a two-sector overlapping generations (OLG) model with endogenous fertility, physical capital, and human capital, where one sector produces goods, and another produces childcare services. If the elasticity of fertility for expenditure on childcare services is zero, the economy experiences endogenous growth, and fertility does not depend on physical and human capital, but it increases with parental child-rearing time. On the other hand, if elasticity is positive, the economy converges to a steady state, and the number of children becomes the homogenous function of degree of elasticity (less than one). In other words, fertility is the decreasing-return-to-scale function of physical and human capital. We show that a subsidy policy for education is more desirable than a subsidy for childcare services.

The Role of a Child Tax Policy: Population, Human Capital, and Economic Growth

This study analyzes the impact of a child tax policy on the population, human capital, and economic growth in an overlapping generations model with endogenous fertility and human capital. The model shows that the child tax policy inhibits population growth and promotes human capital accumulation, generating a trade-off between the quantity and quality of children. The reduced population and increased human capital both contribute to per capita income. The balance between the negative impact of the child tax policy on the population and the positive impact on per capita income ultimately determines the impact on aggregate growth. The results show that the effect on aggregate growth rate is positive when parents' preference for children is large enough, and negative otherwise. In addition, with the pay-as-you-go pension system, I find that, under feasible conditions, the effect of the child tax policy on pensions is the same as that on total growth.

Coping with demographic change: macroeconomic performance and welfare inequality effects of public pension reform

AbstractThis paper evaluates alternative reforms of the public pension system in an overlapping generations model for an open economy facing demographic change. We make progress compared to existing literature on pension reform by modelling individuals with heterogeneous innate ability and endogenous human capital, and by putting (the reduction of) welfare inequality effects of reform at the centre. Frequently adopted reforms such as an increase of the normal retirement age or a decrease of the pension benefit can guarantee financial sustainability, but they fail when the objective is also to avoid intergenerational or intragenerational welfare inequality. Our results prefer a reform which combines an increase of the retirement age with an intelligent linkage between the pension benefit and earlier labour earnings. First, this design conditions pension benefits on past individual labour income, with a high weight on labour income earned when older and a low weight on labour income earned when young. Second, this linkage is complemented by a strong rise in the benefit replacement rate for low ability individuals (and a reduction for high ability individuals).

Endogenous Growth and Human Capital Accumulation in a Data Economy

Endogenous Growth and Human Capital Accumulation in a Data Economy

Macrodynamic Modeling of Innovation Equilibria and Traps

Abstract We study the interplay between the decision of firms to innovate and human capital. Based on a dynamic evolutionary model, we show that in the presence of a high stock of human capital, an advanced economy can remain caught in an “innovation trap”. Following the literature on endogenous growth, R&D investments and human capital are modeled as strategic complements. Skilled workers increase productivity and enjoy a wage premium if they are employed in the R&D sector, while they receive the same wage as unskilled workers if they are employed in the production sector. We model the evolutionary dynamics of the share of innovative firms and human capital to determine the conditions under which an economy converges to a high, low or mixed state of innovation.

The Effect of Pension on Labor Productivity: A Macroeconomic Approach

This paper examines the effect of increasing the retirement age at which people start receiving pension on human capital investment and labor productivity. I build a quantitative overlapping-generations model with endogenous human capital in- vestment in the Ben-Porath style. I find that increasing the retirement age increases human capital investment and labor productivity. People work for longer years un- til the new retirement age, and thus they invest more in human capital while young. Increasing the retirement age by 5 years leads to a welfare improvement of 3.1%. I also examine the effect of legal retirement restrictions and find that they reduce human capital investment and welfare.

DETERMINANTS OF TECHNOLOGICAL INNOVATIONS IN HEALTH TOURISM ENTERPRISES

The research problem is the implementation of technological innovations in health tourism services. The main purpose of the paper is diagnosing determinants of technological innovativeness of enterprises that provide health tourism services. Two detailed objectives were laid down – specifically, an indication of these determinants in respect of the range and type of a technological innovation. The methods applied in the research are: Delphi method, comparative analysis, the range method and the standardised interview method. In order to indicate determinants the following research techniques were used: Kruskal - Wallis test, factor analysis, analysis of medium-rank test, Spearman’s rank order correlation test. The primary result is diagnosing determinants affecting technological innovativeness of the subjects under study which are: quality of endogenous human capital of the surveyed entities and inflow of external information. The research is of ground-breaking nature since until now, technological innovations in health tourism have not been described in economy literature. The results have an impact on the development of economics and management sciences, contributing to the development of innovation theory and enterprise management. Moreover, the results potentially contribute to the practical aspect by means of their application by practitioners – organisers of health tourism.

A vintage model with endogenous growth and human capital

AbstractWe develop an endogenous growth model with vintages of physical capital where human capital is endogenously produced. Under some simplifying assumptions, we can solve the model analytically and study its dynamics. We provide conditions under which a balanced growth path, in the ratio of capital to human capital, exists and is stable, with the transition dynamics exhibiting oscillatory echo effects associated with vintages.

Demographic Uncertainty and Generational Consumption Risk with Endogenous Human Capital

This paper uses a model with overlapping generations to demonstrate that human capital accumulation can potentially attenuate factor price movements in response to birth rate shocks. Specifically, we show that if education spending per child is inversely related to the size of the generation, then there will be less movement in factor prices in response to the relative size of each generation. The degree of this attenuation effect will depend on the effectiveness of education spending in producing human capital. We also demonstrate that this attenuation effect tends to concentrate generational consumption risk around the generation subject to the birth rate shock. In a limiting case, we show that an i.i.d birth rate shock translates into an i.i.d. generational consumption shock. In other words, each generation bears all of the risk associated with their own demographic uncertainty. As a final exercise, we demonstrate that if the tax rate funding education spending varies with the size of the generation rather than education spending per child, then human capital does not influence the dynamic behavior of the economy in response to a birth rate shock.

Education and Tourism in a Small Open Growth Economy

The purpose of this study is to build an economic growth of a small-open economy with endogenous education and tourism. The growth machines of the economy are endogenous human capital, wealth and tourism. The national economy is composed of one industrial sector, one service sector, and one education sector. The production side is based on Solow’s one-sector growth model and Uzawa’s two-sector growth model. The education sector is based on the Uzawa-Lucas two-sector growth model. International interactions are based on the literature of growth models for small open economies and the literature of growth and tourism. We apply Zhang’s utility function to describe household behavior. The household chooses consumption of goods and services, education time, and saving at each point of time. We simulate the nonlinear dynamic system. With the chosen parameter values the dynamic system is characterized of a unique stable equilibrium point. We carry out comparative dynamic analysis to demonstrate transitory as well as long-term effects of changes in different parameters.

An Equilibrium Search Model with Endogenous Growth Rate of Human Capital

This article shows how endogenous human capital affects labor market equilibrium when jobs provided by firms can be either unskilled or skilled and workers differ in their education level which can be either low-educated or high-educated. The market equilibrium is characterized by the unemployment rate and the human capital distributions when the growth rate of the human capital is an endogenous variable. The structure proportion of jobs affects the equilibrium which shows there is a threshold that can distinguish whether the equilibrium is separating or cross-skill. In addition, the cross-skill equilibrium solution implies the high-educated workers are more likely to own higher pay rates than the low-educated workers with same tenure. It also yields a new insight on the effect of the structure proportion of workers on the profits, which implies the profits of firms decrease with the increasing number of the low-educated workers. Moreover, the profit of firms offering the skilled jobs is greater than those offering the unskilled jobs until there is only very few high-educated workers.

How Do the Richest 1% Owns 50% of Wealth in a Small-Open Growth Model with Endogenous Wealth and Human Capital

This paper extends the growth model for a closed national economy by Zhang (2015) to a small-open economy. We attempt to explain some economic mechanisms of how the richest one per cent of the population own 50% of national wealth. We consider endogenous wealth and human capital accumulation by heterogeneous households with different preferences and learning abilities as the main determinants of growth and inequality. We describe the production technologies and economic structure on the basis of the Uzawa two-sector model. By applying Zhang’s concept of disposable income and approach to household behavior, we describe consumers’ wealth accumulation and consumption behavior. We model human capital accumulation on the basis of Arrow’s learning by doing and Zhang’s creativity with leisure. We simulate the model with three groups of the population, the rich 1 %, the middle 69%, and the poor 20%. We demonstrate the existence of an equilibrium point at which the rich 1% own more than half of the national wealth and the poor 20% less than 10% of the national wealth. We show how the system moves to the equilibrium from an initial state and confirm that the equilibrium point is stable. We also conduct comparative dynamic analysis.

Endogenous cycles and human capital

Existing evidence shows that human capital investment is countercyclical. In a dynamic model, I show that countercyclical investment in human capital arises as a result of a parametric combination relating to preferences and technologies. This countercyclical reaction is responsible for complex dynamics in the evolution of human capital, thus initiating a self-sustained sequence of events that generate endogenous cycles.

A Road Map for Efficiently Taxing Heterogeneous Agents

This paper characterizes optimal labor-income taxes that depend on age, household assets, and filing status (one or two earners) within a life-cycle model with heterogeneous, two-member households and endogenous human capital. The key innovation is a labor supply elasticity that varies endogenously among households. I find that tax distortions should be hump shaped in age, decrease in household assets, and be lower for joint relative to single filers. Age and assets act as complements within the optimal tax policy. In contrast, filing status neither complements nor crowds out the age and asset tag. Overall, a tax system using all three tags can increase consumption up to 6.4 percent and welfare up to 1.5 percent.

Economic Oscillations with Endogenous Population, Human Capital and Wealth

This paper demonstrates oscillations in the economic growth model with endogenous population growth and physical and human capital accumulation proposed by Zhang (2014). This study generalizes Zhang’s model by treating all the time-independent parameters as time-dependent parameters. The model is a synthesis of the Solow growth model, Uzawa-Lucas two-sector model, and the Haavelmo population model and the Barro-Becker fertility choice model. The model studies the dynamic interdependence between population change, wealth accumulation, and human capital accumulation. We simulate the model to demonstrate existence of business cycles under different periodic shocks.

Economic Oscillations with Endogenous Population, Human Capital and Wealth

This paper demonstrates oscillations in the economic growth model with endogenous population growth and physical and human capital accumulation proposed by Zhang (2014). This study generalizes Zhang’s model by treating all the time-independent parameters as time-dependent parameters. The model is a synthesis of the Solow growth model, Uzawa-Lucas two-sector model, and the Haavelmo population model and the Barro-Becker fertility choice model. The model studies the dynamic interdependence between population change, wealth accumulation, and human capital accumulation. We simulate the model to demonstrate existence of business cycles under different periodic shocks.