'Intelligent' vs. Human Capital in the Endogenous/Exogenous Growth Debate

Trinity College Economic Technical Paper 19/98

Posted: 8 Sep 1998

See all articles by Alessandro Acquisti

Alessandro Acquisti

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management

Mario Baldassarri

University of Rome I - Department of Public Economics

Date Written: July 1998

Abstract

"Human capital," "ideas" and "knowledge" have been used as interchangeable, almost synonymous terms, representing knowledge-related factors in the neoclassical literature on growth. This paper emphasizes the differences between different forms of knowledge and tests the response of a standard neoclassical model to the treatment of each form as a distinct factor of production. One factor is knowledge in the form of an individual's human capital. It needs to allocate its time between production, accumulation and a non-productive activity (rest or leisure). The second factor represents knowledge incorporated into physical tools, external to those who produced it. This "intelligent" capital (traditional capital incorporating human capital) is used in production and accumulation and does not need leisure. A distinction based on the different time constraints of the two factors can produce, under the hypothesis of balanced growth paths, competition between them and force negative rates of accumulation for one of the two "rival" factors. Moreover, both the endogenous and the exogenous growth results can be achieved, depending on the preferences of the agents. In particular, a trade-off arises between the endogeneity of the choice of leisure and the endogeneity of growth under admissible (in the sense of King, Plosser, Rebelo 1988) utility functional forms.

JEL Classification: O41, O33, O15

Suggested Citation

Acquisti, Alessandro and Baldassarri, Mario, 'Intelligent' vs. Human Capital in the Endogenous/Exogenous Growth Debate (July 1998). Trinity College Economic Technical Paper 19/98, Available at SSRN: https://ssrn.com/abstract=123828

Alessandro Acquisti (Contact Author)

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States
412-268-9853 (Phone)
412-268-5339 (Fax)

Mario Baldassarri

University of Rome I - Department of Public Economics ( email )

via del Castro Laurenziano, 9
Rome, RM 00161
Italy
39 6 49766376 (Phone)

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