Young Workers, Old Workers, and Convergence

50 Pages Posted: 10 Jun 2000 Last revised: 17 Sep 2010

See all articles by Michael Kremer

Michael Kremer

Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER); Center for Global Development; Harvard University - Harvard Kennedy School (HKS)

Jim Thomson

affiliation not provided to SSRN

Date Written: August 1994

Abstract

The human capital of young and old workers are imperfect substitutes both in production and in on-the-job training. This helps explain why capital does not flow from rich to poor countries, causing instantaneous convergence of per capita output. If each generation chooses its human capital optimally given that of the previous and succeeding generations, human capital follows a unique rational- expectations path. For moderate substitutability, human capital within each sector oscillates relative to that in other sectors, but aggregate human capital converges to the steady state monotonically, at rates consistent with those observed empirically.

Suggested Citation

Kremer, Michael R. and Thomson, Jim, Young Workers, Old Workers, and Convergence (August 1994). NBER Working Paper No. w4827. Available at SSRN: https://ssrn.com/abstract=226504

Michael R. Kremer (Contact Author)

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Jim Thomson

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