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Education and training in a model of endogenous growth with creative wear-and-tear

Education and training in a model of endogenous growth with creative wear-and-tear Abstract How does the rate at which firms adopt new technologies affect the level of education and training of a country’s workforce? What is then the mix of general education and technology-specific training that maximises the growth rate of an economy? We try to answer these questions by developing an endogenous growth model which focuses on privately financed general education and firm financed technology specific training in a setting where creative destruction renders technologies gradually obsolete. We reproduce some stylized facts regarding the technology-education-training relationship and we show how the optimum amount of time devoted to education and training is affected by the rate of technical change itself. In particular, we find that a faster arrival of new technologies shifts the private knowledge portfolio towards general human capital, less prone to creative destruction. We also find that households tend to under-invest in education, thus leading to lower growth rates than technically feasible, and higher training costs than absolutely necessary. This suggests that there is room for education policy reducing private education fees. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png "Economia Politica" Springer Journals

Education and training in a model of endogenous growth with creative wear-and-tear

Van Zon, Adriaan; Antonietti, Roberto
"Economia Politica" , Volume 33 (1): 28 – Apr 1, 2016
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References (92)

Publisher
Springer Journals
Copyright
2016 Springer International Publishing Switzerland
ISSN
1120-2890
eISSN
1973-820X
DOI
10.1007/s40888-016-0023-5
Publisher site
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Abstract

Abstract How does the rate at which firms adopt new technologies affect the level of education and training of a country’s workforce? What is then the mix of general education and technology-specific training that maximises the growth rate of an economy? We try to answer these questions by developing an endogenous growth model which focuses on privately financed general education and firm financed technology specific training in a setting where creative destruction renders technologies gradually obsolete. We reproduce some stylized facts regarding the technology-education-training relationship and we show how the optimum amount of time devoted to education and training is affected by the rate of technical change itself. In particular, we find that a faster arrival of new technologies shifts the private knowledge portfolio towards general human capital, less prone to creative destruction. We also find that households tend to under-invest in education, thus leading to lower growth rates than technically feasible, and higher training costs than absolutely necessary. This suggests that there is room for education policy reducing private education fees.

Journal

"Economia Politica" – Springer Journals

Published: Apr 1, 2016

Keywords: Economic Policy; International Political Economy

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