Code for "Endogenous Education and Long-Run Factor Shares"

Principal Investigator(s): View help for Principal Investigator(s) Gene Grossman, Princeton University; Elhanan Helpman, Harvard University; Ezra Oberfield, Princeton University; Thomas Sampson, London School of Economics

Version: View help for Version V1

Name	File Type	Size	Last Modified
OLG-BenPorath-Final-Calibration.nb	text/plain	62 KB	10/12/2020 12:39:PM
Readme.pdf	application/pdf	21.9 KB	10/12/2020 12:38:PM

Project Citation:

Grossman, Gene, Helpman, Elhanan, Oberfield, Ezra, and Sampson, Thomas. Code for “Endogenous Education and Long-Run Factor Shares.” Nashville, TN: American Economic Association [publisher], 2021. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2021-05-24. https://doi.org/10.3886/E121424V1

Project Description

Summary: We study the determinants of factor shares in a neoclassical environment with capital-skill complementarity and endogenous education. When more physical capital raises the marginal product of skills relative to that of raw labor, an increase in a broad measure of embodied human capital raises the capital share in national income for any given rental rate. When education is chosen optimally, a dynamic equilibrium is characterized by an inverse relationship between the level of human capital and both the rental rate on capital and the difference between the interest rate and the growth rate of wages. As a consequence, estimates of the elasticity of substitution that fail to account for levels of human capital will be biased upward. We develop a model with overlapping generations, ongoing increases in educational attainment, and technology-driven neoclassical growth, and show that for a class of production functions with capital-skill complementarity, a balanced growth path exists and is characterized by an inverse relationship between the rates of capital- and labor-augmenting technological progress and the capital share in national income.

Scope of Project

Subject Terms: neoclassical growth; balanced growth; human capital; education; technological progress; capital-skill complementarity; labor share; capital share

JEL Classification:
      E22 Investment; Capital; Intangible Capital; Capacity
      E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
      I26 Returns to Education
      J24 Human Capital; Skills; Occupational Choice; Labor Productivity
      O33 Technological Change: Choices and Consequences; Diffusion Processes
      O41 One, Two, and Multisector Growth Models
      O47 Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

Data Type(s): program source code

Related Publications

Download this project

Published Versions

V1 [2021-05-24]

Export Metadata

Dublin Core

DDI 2.5

Report a Problem

Found a serious problem with the data, such as disclosure risk or copyrighted content? Let us know.

This material is distributed exactly as it arrived from the data depositor. ICPSR has not checked or processed this material. Users should consult the investigator(s) if further information is desired.