Technological Change, Human Capital Structure, and Multiple Growth Paths
Yong Jin Kim
Korea University; National Bureau of Economic Research (NBER); Asian Development Bank - Office of the Chief Economist
Japanese Economic Review, Vol. 62, Issue 3, pp. 305-330, 2011
This paper presents a theoretical model to analyze the effects of technology change on growth rates of income and human capital in the uncertain environments of technology. The uncertainty comes from two sources: the possibility of a technology advance and the characteristics of new technologies. We set up an overlapping generations model in which young agents invest in both width and depth of human capital in order to adopt new technologies. The model develops explicitly the micro‐mechanism of the role of human capital in adopting new technologies as well as that of the process of human capital production in the uncertain environments. In our model, a higher level of width of human capital relative to the level of depth leads one country to a higher growth path. We also show that an economy can have different growth paths depending on the initial structure of human capital and the uncertainty about the nature of new technologies. In particular, new technologies with more uncertain characteristics may adversely affect human capital accumulation and income growth, leading the economy to a low growth trap.
Number of Pages in PDF File: 26
Keywords: J24, O33Accepted Paper Series
Date posted: August 25, 2011
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