Directed Technology Adoption, Human Capital Formation and World Income Distribution
34 Pages Posted: 29 May 2010
Date Written: April 2010
This paper investigates the effects of skill bias technical change at the frontier on the evolution of output and human capital in the adopting countries. The framework introduces a novel feature by connecting the direction of technology adoption to a sequential process of skill accumulation, where the returns of advanced human capital depend on the quality of basic education. I find that moderate skill bias produces convergence in output per capita, while strong skill bias leads to convergence clubs. The predictions of the model are broadly consistent with the evolution of world income distribution and educational attainments during 1960-2000.
Keywords: SBTC, technology adoption, basic and advanced education, convergence
JEL Classification: I21, O15, O33, O47
Suggested Citation: Suggested Citation