Working Paper: NBER ID: w3414
Authors: Gary S. Becker; Kevin M. Murphy; Robert F. Taussig
Abstract: Our model of growth departs from both the Malthusian and neoclassical approaches by including investments in human capital. We assume, crucially, that rates of return on human capital investments rise, rather than, decline, as the stock of human capital increases, until the stock becomes large. This arises because the education sector uses human capital note intensively than either the capital producing sector of the goods producing sector. This produces multiple steady scares: an undeveloped steady stare with little human capital, low rates of return on human capital investments and high fertility, and a developed steady stats with higher rates of return a large, and, perhaps, growing stock of human capital and low fertility. Multiple steady states mean that history and luck are critical determinants of a country's growth experience.
Keywords: human capital; fertility; economic growth
JEL Codes: J13; O11; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher investments in human capital (J24) | increased rates of return on those investments (G11) |
| higher investments in human capital (J24) | further investments in human capital (J24) |
| higher fertility rates (J13) | negatively impact investments in human and physical capital (E22) |
| higher fertility rates (J13) | increased time costs associated with child-rearing (J13) |
| increased time costs associated with child-rearing (J13) | negatively impact investments in human and physical capital (E22) |
| countries with low initial human capital and high fertility (O15) | stagnate economically (O54) |
| countries with higher human capital levels and lower fertility rates (O15) | experience growth (O00) |