Rate Of Human Capital Accumulation Research Articles

Robot revolution and human capital accumulation: implications for growth and labour income

AbstractWe develop a model of endogenous growth with automation to study the impact of industrial robots on growth and labour income. We incorporate human capital accumulation into that framework to examine the role of human capital in sustaining growth without displacing low-skilled labour. While automation replaces low-skilled labour with industrial robots in conducting routine tasks, horizontal innovation creates new varieties in which low-skilled labour has an employment advantage. Labour-augmenting technology takes place to improve productivity of low-skilled labour. As such, those latter types of innovation help counterbalance the adverse effect of automation on low-skilled labour. Human capital, the essential production factor that takes part in every economic activity, including conducting non-routine tasks, accumulates over time through education and training. We show that there exists a long-run equilibrium at which either robots or low-skilled workers are employed, together with human capital, to produce varieties. In the fully endogenous model, final output grows at the rate of human capital accumulation. An improvement in the quality of education and training leads to an acceleration of both automation and variety expansion, but not human capital growth. Our numerical exercise indicates that a permanent increase in automation entails a permanent impact on the range of automated varieties, long-run output level and human capital wage. The shock lowers long-run growth and low-skilled workers’ wage and their effective income share. However, it has no effect on the effective income share of human capital.

A Study on the Impact of Higher Education Expansion on Human Capital Accumulation and Economic Development - An Empirical Analysis Based on Structural Equation Model

Abstract Based on structural equation modeling, this paper investigates the impact of expanding higher education levels on human capital accumulation and economic development. The relationship between latent and latent variables is used to estimate the maximum likelihood estimates of scale expansion by calculating unstabilized and stabilized weights. A weighted linear combination of weights in the weights pool is used to construct the SL estimator. Based on the structural equation model, the prediction model of the impact of higher education scale expansion on human capital and economic development is constructed, and four impact hypotheses are proposed. The results show that the rate of return to higher education for expanding the higher education scale is 4.36%. The rate of human capital accumulation is 102.36%, while the level of economic development is 63.89%. It indicates that the positive effect of expanding higher education levels on human capital accumulation and economic development is significant.

Fertility subsidies can have ambiguous effects on birth timing

Pronatalist subsidies often vary with birth order (parity). I study the effect of such subsidies on birth timing in a life-cycle model of fertility choice. In the model, births permanently reduce the rate of human capital accumulation. While subsidies to marginal births always accelerate the time to next birth, subsidies to higher-order births can extend those times for women at low parities. The result is not driven by income effects, quantity-quality substitution, biological constraints, or uncertainty. Instead, it is that slower anticipated earnings growth in the future raises the marginal value of human capital in the present.

Do Long-Run Disasters Promote Human Capital in China? -The Impact of 500 Years of Natural Disasters on County-Level Human-Capital Accumulation.

Is there a relationship between the frequency of regional natural disasters and long-term human-capital accumulation? This article investigates the long-run causality between natural calamities and human-capital accumulation with macro and micro data. Empirical cross-county analysis demonstrates that higher frequencies of natural calamities are correlated with higher rates of human-capital accumulation. Specifically, on the basis of empirical data of the fifth census in 2000 and China’s Labor-Force Dynamics Survey in 2012, this paper exploits the two databases to infer that the high disaster frequency in the years of 1500–2000 was likely to increase regional human-capital accumulation on district level. High natural-calamity frequency reduces the expected rate of returning to physical capital, which also serves to increase human-capital. Thus, experiencing with natural disasters would influence human’s preference to human-capital investment instead of physical capital.

Service Good as an Intermediate Input and Optimal Government Policy in an Endogenous Growth Model

The present article considers an endogenous growth model in which the service output is used as intermediate good in commodity sector, tax is imposed on manufacturing product and the revenue earned is invested to create human capital. It is shown that there exists a unique, saddle path stable steady-state growth rate of human capital accumulation and a unique growth-maximizing tax rate. The optimal tax rate for the command economy is compared with growth-maximizing tax rate in competitive economy. A numerical analysis shows that the command economy will have a higher growth rate than the competitive economy. An extension of the model where households privately spend for accumulation of human capital yields the same growth rate as that of the command economy of the previous model. JEL Classification: E6, H2, O4

Heterogeneity in the effect of mid-childhood height and weight gain on human capital at age 14-15 years: Evidence from Ethiopia, India, Peru, and Vietnam.

BackgroundUnder-nutrition in early childhood has harmful impacts on human capital formation in children, with implications for educational, adult health, and labor market outcomes. We investigate the association of linear growth and weight gain in mid-childhood with years of schooling, the Peabody Picture Vocabulary Test score, and math test score during the adolescent age of 14–15 years.MethodsData were derived from the Young Lives study conducted in four low- and middle-income countries (Ethiopia, India, Peru, and Vietnam). The data had detailed information on the children anthropometry and characteristics of the child, household, and community. Multivariate regression analysis, adjusted for the confounding variables, was used to investigate the association between mid-childhood health, measured by conditional linear growth and relative weight gain, and human capital outcomes in adolescent age.ResultsAfter controlling for several confounders, one cm increase in conditional linear growth increased years of schooling by 0.034 years and the Peabody Picture Vocabulary Test score and math test score by 0.474 and 0.083 points respectively. Relative weight gain was negatively associated with years of schooling and math test score. There is no evidence of heterogeneous effects by rural, gender, and household wealth. In the quantile regression analyses, the association between conditional linear growth and outcomes is stronger at the lower level of years of schooling and the Peabody Picture Vocabulary Test score.ConclusionOur study highlights that mid-childhood nutritional intervention targeted for students at the lower level of education distribution can accelerate the rate of human capital accumulation in low- and middle-income countries.

Secular Stagnation: Determinants and Consequences for Australia

Larry Summers’ re-use of the phrase appears justified in the present global economic climate since many factors contribute to comparatively poor OECD economic performance and weakening macroeconomic policy instruments. Some are measurement issues and others might be seen as the downsides of globalisation, which has integrated financial markets and redirected growth from the advanced toward the emerging economies. Yet measurable rates of return on investment do appear to be impaired by rises in perceived investment risks, institutionalised risk aversion, increased ageing and dependency, declining shares of government spending in public investment and R&D with rising shares of these directed to health, the retention of trade distortions, new concentration in industrial structure and a slower rate of human capital accumulation, not to mention an unexpected global abundance of fossil fuels and a slower Chinese economy. The information and literature supporting these concerns is reviewed and implications for global and Australian policy are inferred.

Corrupt Bureaucrats, Bad Managers, and the Slow Race between Education and Technology

​We study a developing economy in which the representative firm’s production function exhibits complementarities between human capital and the available level of technology. The firm invests in the acquisition of new technology, while employees decide how much human capital to acquire. The rate of human capital accumulation positively affects the economy’s growth rate, and therefore in our baseline case a reform that improves the educational system boosts growth. An important caveat, however, is that the absence of robust institutions may lead to lax enforcement of property rights and limit the incentives for firms to invest in new technology. The lack of investment in technology constrains demand for human capital and undermines the success of the education reform. It can even lead to a brain drain as individuals take advantage of the education reform and then move to an economy with higher demand for their acquired skills. We also consider our model findings with respect to the real-world case of Russia. Our main conclusion is that measures to improve the school system need to be accompanied by other institution-building measures that enhance property rights, promote good management practices and reduce incentives to engage in corrupt behaviors.

One size that didn’t fit all? Electoral franchise, fiscal capacity and the rise of mass schooling across Italy’s provinces, 1870–1911

Italy’s regions experienced different rates of human capital accumulation in the late nineteenth and early twentieth centuries. Although southern regions were very disadvantaged when the unification of the country took place in 1861, they caught up at a very slow pace—and a remarkable regional divide in education persisted until the interwar period. While previous hypotheses have focused on the role played by fiscal capacity, this paper sheds new light on the effect that enfranchisement had on the growth of schooling. The presence of large regional disparities in local electoral franchise is confirmed by the data; however, the relationship between voting rights, the intensity of local direct taxation and municipal fiscal capacity is weak at best. Furthermore, if the impact of these factors is analysed separately through a number of econometric models, fiscal capacity stands out as the most significant determinant of education across Italy’s provinces. Against recent hypotheses, these results show that the different distribution of political voice within Italy’s municipalities did not determine the persistence of regional inequalities in schooling in the long run: it was Italy’s national education system, together with remarkable and pre-existent regional disparities, that slowed down the development of human capital in rural and southern regions, with immense costs in terms of future prospects for economic growth and human development.

Pay-as-you-go or funded social security? A general equilibrium comparison

This paper demonstrates that the analysis of fiscal sustainability of social security must include the education funding dimension of public policy, which affects the productivity of future workers. This fact is true under both social security regimes: pay-as-you-go (PAYG) and fully funded (FF). We consider an OLG economy where the government, in addition to running social security, also funds education via a dedicated tax. The education tax rates are chosen, in each period, by a majoritarian rule. We demonstrate, contrary to conjectures in the literature, that the FF social security system produces political support for a relatively higher (compared to PAYG) education funding, and hence generates higher rates of human capital accumulation, physical capital accumulation, and economic growth, Furthermore, it also results in a comparatively lower degree of income inequality.

Public expenditures on education, human capital and growth in Canada: An OLG model analysis

Much of the current debate in ageing countries focuses on whether governments should increase investments in human capital. We address this issue by simulating the effects of additional education spending using an overlapping-generations model applied to Canada. In the context of population ageing, the results indicate that how the policy is funded has powerful impacts on the targeted outcomes. Higher education incentives may increase the rate of human capital accumulation and mitigate the negative effects of slowing labour force growth. However, the impact depends on the distortions implied by alternative tax instruments and the efficiency of public expenditures on education.

The greying of the global population and its macroeconomic consequences

Population ageing is emerging as a major demographic trend in many countries, with potentially important implications for a variety of macroeconomic issues. Notwithstanding these challenges, population ageing will likely have a comparatively modest effect on economic growth. Although the changed age distribution would be expected to cause the labour force participation rate to decrease, the ratio of labour force to population will actually increase in most countries. This will occur because the lower youth dependency rate and the increased rate of female labour force participation—both of which may reasonably be expected to follow from the fertility rate declines that are driving population ageing—will counterbalance the shifting of adults toward older ages at which labour force participation and savings rates are lower. Behavioural and policy responses to population ageing—including higher savings for retirement, a higher rate of human capital accumulation, alternate pension funding plans, and (possibly) increased migration from labour-abundant to labour-scarce countries—also suggest that population ageing need not necessarily significantly impede economic growth.

Does Urbanization Foster Human Capital Accumulation?

The literature on growth theory has pointed to the importance of human capital in order to explain the process of economic development. In the present study, we highlight the role played by cities in fostering human capital accumulation. More particularly, building on a simple urban economics model, we perform cross-country estimations, measuring the relation between human capital accumulation and urbanization. Our results support the result according to which more urbanization induces higher rates of human capital accumulation, but only above a certain threshold level of development. This latter result raises policy concerns on issues related to over-urbanization.

Alternative Social Security Systems and Growth

Demographic trends in most developed economies are characterized by rising longevity and decreasing birthrates. These trends endanger the sustainability of the current public pension systems. Therefore social security reform proposals are on the agenda in many countries. This paper demonstrates that the analysis of fiscal sustainability of social security must include an additional dimension of public policy, namely education funding. Indeed, the productivity growth of future workers, which depends on human capital accumulation, may outweigh the impact of the demographic problem. This fact is true under both pay-as-you-go (PAYG) and fully funded (FF) social security system. We consider an OLG economy where government, in addition to running social security, also funds education of future workers by means of taxes collected from the current ones. The education tax rates are chosen, in each period, by a majoritarian rule among the relevant constituents. We demonstrate that while the FF system results in relatively higher rates of physical capital accumulation, then under some conditions, other things equal, the PAYG social security regime leads to the choice of relatively higher respective levels of education tax rates in all generations, and thereby to higher rates of human capital accumulation.

Clash of Career and Family: Fertility Decisions after Job Displacement

In this paper we investigate how fertility decisions respond to unexpected career interruptions which occur as a consequence of job displacement. Using an event study approach we compare the birth rates of displaced women with those of women unaffected by job loss after establishing the pre-displacement comparability of these groups. Our results reveal that job displacement reduces average fertility by 5 to 10% in both the short and medium term (3 and 6 years) and that these effects are largely explained by the response of white collar women. Using an instrumental variable approach we provide evidence that the reduction in fertility is not due to the income loss generated by unemployment but arises because displaced workers undergo a career interruption. These results are interpreted in the light of a model in which the rate of human capital accumulation slows down after the birth of a child and all specific human capital is destroyed upon job loss.

HIV/AIDS, human capital, and economic growth prospects for Mozambique

This paper examines the implications of AIDS deaths for economic growth prospects for Mozambique. Human capital accumulation through education receives particular attention. Education and human capital transition matrices are estimated using a minimum cross entropy approach. Consistent with evidence from Tanzania and elsewhere, HIV/AIDS is assumed to slow the rate of human capital accumulation. Using a dynamic computable general equilibrium approach, reduced rates of human and physical capital accumulation are shown to interact strongly with technical change that is biased towards physical and human capital. The results point to the education sector as a major and policy sensitive channel of impact.

The transition to a globalized economy: Poverty, human capital and the informal sector in a structuralist CGE model

Recent econometric evidence suggests that trade liberalization has an elusive relationship to growth and income distribution. This paper provides an explanation for these results via numerical simulations of a dynamic structuralist CGE. The conclusion is that if families become too poor to finance human capital accumulation, or the state too stingy to supply it at a reasonable cost, exports of skill-intensive goods can become uncompetitive and the transition to openness may involve increasing poverty, unemployment and stagnation. The model design incorporates an informal sector as well as accumulation of human capital. The paper simulates two trajectories, a “green” path in which per capita income grows steadily with a rapid rate of human capital accumulation and a reduction in the level of economic informality. A second, or “red” path is also possible, however, with a growth rate that is much lower, an expanding informal sector and an inadequate rate of human capital formation.

Mortality Reductions, Educational Attainment, and Fertility Choice.

This paper develops a model where reductions in mortality are the main force behind economic development. The model generates a pattern of changes similar to the demographic transition, where gains in life expectancy at birth are followed by reductions in fertility and increases in the rate of human capital accumulation. The onset of the transition is characterized by a critical level of life expectancy at birth, which marks the movement of the economy from a Malthusian equilibrium to an equilibrium with investments in human capital and the possibility of long-run growth.

The Political Determinants of Economic Performance

The authors present and test a theory about the effects of political competition on the sources of economic growth. Using Mankiw, Romer, and Weil’s model of economic growth and data for roughly 80 countries, the authors show that political competition decreases the rate of physical capital accumulation and labor mobilization but increases the rate of human capital accumulation and (less conclusively) the rate of productivity change. The results suggest that political competition systematically affects the sources of growth, but those effects are cross-cutting, explainingwhy democracy itself may be ambiguous. These findingshelp clarify the debate about regime type and economic performance and suggest new avenues for research.

The Role of Human Capital and Population Growth in R&D‐based Models of Economic Growth*

AbstractHuman capital accumulation is introduced in a growth model with R&D‐driven expansion in variety and quality of intermediate goods and knowledge spillovers from both research activities. Economic growth is no longer uniquely tied to population growth as previous growth models without scale effects suggest. The model predicts that economic growth depends positively on the rate of human capital accumulation and positively or negatively on population growth and is therefore supported by empirical evidence to a greater extent than previous models. In particular, long‐run growth is compatible with a stable population.