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Sources of productivity growth in a medium term macroeconomic model with human capital

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Published by College of Commerce and Business Administration, University of Illinois at Urbana-Champaign in [Urbana, Ill.] .
Written in English

Book details:

Edition Notes

Includes bibliographical references (p. 31-33).

StatementWalter W. McMahon
SeriesBEBR faculty working paper -- no. 975, BEBR faculty working paper -- no. 975.
ContributionsUniversity of Illinois at Urbana-Champaign. College of Commerce and Business Administration
The Physical Object
Pagination35 p. ;
Number of Pages35
ID Numbers
Open LibraryOL25105072M

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  Productivity is the most important determinant of the standard of living of a group of people, a nation or a planet. Productivity in its simplest form is output per hour worked, and its recent Author: Bill Conerly. Productivity can be increased through investment in physical or human capital, as well as technology. In addition, institutions that align individual incentives with growth and promote entrepreneurship help the economy expand. The production function relates total . We commonly focus on labour productivity measured by output per person employed or output per person hour.; A better measure of productivity growth is total factor productivity which takes into account changes in the amount of capital to use and also changes in the size of the labour force.; If the size of the capital stock grows by 3% and the employed workforce expands by 2% and output (GDP.   That is how capital investment leads to higher productivity and future economic growth. Article Sources Investopedia requires writers to use primary sources to support their work.

Growth in human capital and physical capital often explains only half or less than half of the economic growth that occurs. New ways of doing things are tremendously important. Second, while investment in physical capital is essential to growth in labor productivity and GDP per capita, building human capital is at least as important. (16) Thus, there are two sources of increases in output per worker:  Technological progress  Capital deepening (i.e. increases in capital per worker) The Solow model provides a useful framework for understanding how technological progress and capital deepening interact to determine the growth rate of output per worker.   The first contribution of this article is to provide a simple model of fertility and human capital that follows very closely from the work of Becker et al. The second contribution is to review previous research on the linkages between fertility, human capital, and economic growth so as to lay a foundation for the analysis that follows. Human capital, physical capital, social capital. According to the Classical growth model, the most important source of economic growth was: capital accumulation. According to the Classical growth model, an economy that increases its saving will grow.

S. Basu, C.L. House, in Handbook of Macroeconomics, 2 Defining “The Wage” Macroeconomic models are typically populated by a large number of identical worker-consumers, who supply labor along the intensive margin in a spot market. In this setting, it is easy to define the wage: it is the current payment at time t for an extra unit of labor supplied in the same period. The term "human capital" is used to describe. Short-run economic growth is represented by a movement from a point inside the production possibilities frontier to a point on the production possibilities frontier. Sources of economic growth: growth in the labor supply.   Benhabib and Spiegel () have shown that the introduction of human capital as a factor of production by function type Coob -Douglas leads to its insignificant effect on growth of GDP per capita, but if taken into account the influence of human capital on total factor productivity, the effects are visible in two aspects: a) human capital. Motivation: Solow’s growth model Most modern dynamic models of macroeconomics build on the framework described in Solow’s () paper.1 To motivate what is to follow, we start with a brief description of the Solow model. This model was set up to study a closed economy, and we will assume that there is a constant population. The model.