In this paper we investigate the relationship between economic and populationgrowth in an endogenous growth model driven by humancapital accumulation à la Lucas (1988). Since we allow for endogenous populationgrowth, we adopt the population criterion Relative Critical Level Utilitarianism (an extension of Critical Level Utilitarianism, Blackorby et al. 1995) which allows axiomatically founded welfare orderings under variable population. Under this extension the Critical Level Utility is dependent on parents’ wellbeing. In this scenario we investigate the equilibrium relation between economic growth and populationgrowth as functions of the underlying parameters and we provide the conditions for the economic take-off to occur. A simulation analysis calibrated on Developing Countries shows that the model has the potential to explain the divergent dynamics of GDP per capita growth and populationgrowth experienced by those countries.
where σ and ξ are parameters measuring the productivity of education and the strength, if any, of the negative effect of populationgrowth on per-capita humancapital invest- ment respectively. When ξ = 1, Eq. (12) shows the existence of a dilution effect of populationgrowth on per-capita humancapital accumulation (analogous to that of Eq. (11 0 ). A possible explanation of such effect would be that since newborns enter the world uneducated they naturally reduce, ceteris paribus and at a given point in time, the existing stock of humancapital per-capita, hence populationgrowth ultimately op- erates like a form of depreciation of individual skills, h. Indeed, this effect is not present in the original Lucas (1988, p. 19, Eq. 13)’ formulation. Lucas’ assumption (newborns enter the work-force endowed with a skill-level proportional to the level already attained by older members of the family, so populationgrowth per se does not reduce the current skill level of the representative worker) is based on the social nature of humancapital accumulation, which probably makes it different from the accumulation of physical cap- ital and of any other tangible asset. Indeed when ξ = 0, Eq. (12) is able to recover also this idea. A value of ξ ∈ (0;1) represents an intermediate case between the previous two, even though in our analysis we do not put any a-priori upper bound on the magnitude of parameter ξ.
Migration files. This dataset includes only internal migrants; international in-migrants and out- migrants are not included. A person is considered a migrant if they lived in a different county in 2000 than they did in 1995. While defining a person’s place of residence is straightforward for most people, it is a bit more complicated for some young people away at college. In a sense, some such students have two residences: the place where they reside while attending school and the place where they reside in between school sessions, often being their parents’ residence. The Census questionnaire instructed respondents that students away at college are to be counted as residents of the places where they attend college and not their parents’ residences. Unfortunately though, there could still be some misreporting of residences, especially prior residences of persons who were enrolled in college five years prior to the census. If so, the effects of the college share on out-migration may be understated and the effects of the college share on net migration may be overstated. To partially address this concern, we also briefly look at the effect of the share of adults with a college degree on populationgrowth.
The evolution of economies over most of human history was marked by Malthusian stagnation. Technological progress and populationgrowth were miniscule by modern standards and the average growth rate of income per capita was even slower due to the offsetting effect of populationgrowth on the expansion of resources per capita. In the past two centuries, in contrast, the pace of technological progress increased significantly in association with the process of industrialization. Various regions of the world departed from the Malthusian trap and initially experienced a considerable rise in the growth rates of income per capita and population. Unlike episodes of technological progress in the pre-Industrial Revolution era that failed to generate sustained economic growth, the increasing role of humancapital in the production process in the second phase of the Industrial Revolution ultimately prompted a demographic transition, liberating the gains in productivity from the counterbalancing effects of populationgrowth. The decline in populationgrowth and the associated advancement in technological progress and humancapital formation paved the way for the emergence of the modern state of sustained economic growth.
Health do not only improve growth by making more market time available for the workers to generate income, it also increases healthy practices resulting to a reduction in the mortality rate and also reduces the fertility rate, contributing to voluntary population control. And as Solow (1957) argues, a higher populationgrowth is negatively related with labour productivity. Ranis, Gustav and Stewart (2000) found that out of the eight economic growth-lopsided nations in 1960-70, all of them moved through the vicious cycle of low economic growth/low human development. Across countries, economic history has a large record of ‘massive divergence’ in economic growth and development over the several centuries. Across the globe, in the three-four centuries ago, economic indices would show all countries to be relatively poor, if their living standards were assessed in today’s economic reality (Durlauf, Johnson and Temple, 2004). Even though, the growth rate of those economies compared in present terms were low, the resulting growth was sustained over time, culminating into increased productivity, output, and a steady rise of the per capita income at the aggregate level. Compared to other nations of Africa and some Asian countries, even though, their economies also grew, it was never consistent or sustained and in most cases, the macroeconomic performance resulted into negative growth.
This study relies heavily on the endogenous growth Theory. The most basic proposition of growth theory is that in order to sustain a positive growth rate of output per capita in the long run, there must be continual advances in technological knowledge, for which foreign direct investment is a source in the form of new goods, new markets, or new processes. This proposition is demonstrated using the neoclassical growth model developed by Solow and Swan, which shows that if there were no technological progress, then the effects of diminishing returns would eventually cause economic growth to cease . The basic building block of the neoclassical model is an aggregate production function exhibiting constant returns in labour and reproducible capital. Here, there is an abstraction from all issues concerning populationgrowth and labour supply by assuming a constant labour supply normalized to equal unity. Thus the aggregate production function can be written as a function of capital alone: Y = F (K). This function expresses how much output Y can be produced, given the aggregate capital stock K, under a given state of knowledge, with a given range of available techniques, and a given array of different capital, intermediate and consumption goods. It is assumed that all capital and labour are fully and efficiently employed, so that F (K) is not only what can be produced but also what will be produced.
Although, in principle, a better-educated and well-trained workforce can be expected to exert a positive effect on growth, 23 results have sometimes shown a different pattern, with the impact of humancapital on growth being negative and/or statistically insignificant, especially in panel data studies (Islam, 1995). The explanation for such an unexpected result can be the use of poor quality data and inadequate proxies to capture qualitative rather than quantitative aspects of humancapital. Still, we expect humancapital proxies to exert a positive impact on growth. As for the international trade variables, we expect them to have a positive effect on growth. In fact, several studies point to openness as fostering growth (Wacziarg, 1998; Pan, 1999; Frankel and Romer, 1999) and trade balance deficits restrain growth, according to the Post- Keynesian approach. About the role of the populationgrowth rate on economic growth, Mankiw et al. (1992) argued that populationgrowth contributes negatively to income growth since the available capital must be spread more thinly over the working age population. Temple (1999), contributing to the discussion, stressed that while populationgrowth is economically harmful (the Malthusian hypothesis), it can also affect demand and the final impact on growth is not as clear as Mankiw et al. (1992) defined. Therefore, the final impact depends on which of the two effects prevails. 24 Physical capital is considered to positively influence growth, due to its impact on the steady-state level of output per capita and hence, on the growth of output - the neoclassical view - or due to spillover effects and economies of scale - the endogenous growthapproach (Economidou et al., 2006). Moreover, whenever the convergence factor demonstrates a negative and significant value it indicates the existence of conditional convergence.
Hanushek and Kimko (2000), concerned with finding a better measurement of the quality of humancapital, measure it using scores obtained from students participating in international assessments in science and mathematics. Starting from these test scores, they construct a unique (normalised) labour force quality measure for 31 countries covering the period from 1960 to 1990. They computed a quality measure for each country's labour force using the weighted average over all harmonised test scores where each country's weight is calculated as the normalised inverse of its standard error. They then performed a single cross-country regression for the 31 countries over the 1960-1990 period. The authors used the investigations of the IEA (International Association of the Evaluation of Educational Achievement) and of the IEAP (International Assessment of Educational Progress). In total, twenty-six series of educational performances were taken into account (by distinguishing according to age, the field of competence, namely mathematics and sciences, and year). The authors then proceeded to a regression of the average annual growth rate on the initial (1960) per capita income, the quantity of schooling, the average rate of populationgrowth, the quality of the labour force and a constant. Their estimate reveals a negative and significant coefficient on the initial per capita income variable; a positive but insignificant one on the quantity of schooling variable; a positive and highly significant coefficient on the labour force quality variable; and a negative but insignificant coefficient on the rate of populationgrowth. After testing for causality, they conclude that there is a significant and positive causal relationship between the quality of the labour force (in other words better productivity) and the growth rate of the economy.
It therefore follows that Pakistan could increase its rate of economic growth by investing more in humancapital. The government has already started to make such investments in the last few years and aims to continue to do more in the years ahead. Despite considerable fiscal adjustment, social spending was raised by about one percentage point of GDP in the last three years, or by over 30 percent in real per capita terms. While the effect that increasing investment in humancapital would have on growth would be somewhat smaller than that of raising investment or improving the overall quality of institutions, the impact would still be significant. For example, the average years of schooling received by Pakistan’s population 15 years and older was 3¼ years. Raising this by 1½–2 years—to the levels of countries such as Thailand or Venezuela—would be a major achievement, as it could raise the real per capita growth rate permanently by about ½ percentage point per year. Improving health care to achieve an increase in the life expectancy of Pakistan’s population by five years—to levels comparable to that of countries such as Morocco or the Philippines—would add another ½ percentage point to its annual real per capita growth rate. Within the region, Sri Lanka is a good example of a country that has better social indicators and has achieved somewhat stronger per capita growth rates than Pakistan, despite its prolonged ethnic strife.
To examine the magnitude of the underestimate of the labor input using the fixed weight efficiency units methods we constructed efficiency unit aggregates by skill and in total using a method analogous to Krusell et. al. (2000) and Kydland and Prescott (1993). As noted above, these fixed weight methods are similar to the BLS and Jorgenson methods in that they aggregate the hours of different types of workers using average wages as weights, classifying the different types of workers according to age, sex and education. The composition adjustment applied to aggregate hours implied by the fixed weight approach is almost identical to the estimates obtained for BLS style methods. 46 For paid workers, for example, Table 4 shows a growth of 79.86 percent from 1977 to 2000 using the BLS method; the fixed weight method estimate for the same period is 80.21 percent. Thus, the fixed weight method has the same degree of underestimation of the increase in the labor input as the BLS method. Fixed weight methods, by construction, do not permit total efficiency units of labor to increase if the demographic composition does not change, except through hours. This likely has little effect for cyclical analysis, but for longer term secular growth or cross country comparison, it is potentially extremely important. One important consequence is the potential for serious overestimation of MFP and underestimation of the role of humancapital in growth.
To the best of our knowledge, and within a similar framework, this is one of the first attempts in this direction. In this respect, we should probably mention a recent paper by Jones and Williams (2000) aimed at analysing whether a decentralised economy undertakes too little or too much R&D in the presence of some distortions to the research activity. 4 Still, in this paper there is no humancapital accumulation, no evaluation of the possible long-run links between (im)perfect competition and growth and capital goods and research are produced devoting units of foregone consumption. Finally, other two works that come closer to ours are Bucci (2001, 2002b). The main difference with respect to the first of these two papers is that the present contribution endogenises the shares of humancapital devoted to each economic activity (that are kept exogenous in that approach), whereas the difference with respect to the second one is that this paper does represent a simple generalization of it (encompassing it as a special case). 5
Education and health are fundamental to economic growth and development and are one of the key determinants of economic performance both at the micro and macro levels. This derives from the fact that education and health are both direct component of human well-being and a form of humancapital that increases an individual’s capabilities (Bloom & Canning, 2003). Grossman (1972) has equally demonstrated that education and health are forms of humancapital. Schultz (1992) argued that population quality is the decisive factor of production and emphasized the intrinsic worth of investing in education and health. In humancapital development, education is essential. Education is concerned with the cultivation of the whole person including intellectual, character and psychomotor development. It is the human resources of any nation, rather than its physical capital and material resources, which ultimately determine the character and pace of its economic and social development. Humancapital is an all-embracing concept, that is, it is a continuum, a continuing process from childhood to old age, and a must for any society that wishes to survive under the complex challenges of a dynamic world. he concept of humancapital has shifted the focus of economic development theorists to generally agree that the quality of humancapital has a significant impact on economic development and growth. This body of thinking is of the opinion that the quality and quantity of labour determine the production by virtue of it being a major factor of production. Moreover, improving the quality of the labour force yields implicit, non-economic outputs related to the generation of ideas and decisions which have a significantly positive impact on investment, innovation and other growth opportunities (Adebiyi, 2006; Roux, 1994).
it must be expected, will replace the capital laid out upon it, with at least the ordinary profits. A man educated at the expense of much labour and time to any of those employments which require extraordinary dexterity and skill, may be compared to one of those expensive machines. The work which he learns to perform, it must be expected, over and above the usual wages of common labour, will replace to him the whole expense of his education, with at least the ordinary profit of an equally valuable capital. It must do this, too, in a reasonable time, regard being had to the very uncertain duration of human life, in the same manner as to the more certain duration of the machine” (Smith 1776, p. 93)
This paper examines the impact of humancapital development on economic growth in Nigeria. Theoretical growth models and macroeconomic evidence suggest that humancapital accumulation is an important determinant of per capita income growth. However, Hideki et al. (2005) note that outliers, measurement errors, and incorrect specifications may have affected early macroeconomic studies that found a weak relationship between growth and humancapital accumulation. While recent studies addressing these problems are beginning to show larger positive effects, the potential endogeneity of humancapital accumulation has received relatively little attention. We therefore investigate the relationship between humancapital and economic growth in Nigeria with time series data which covers periods 1981-2010. Adopting the endogenous modeling approach cast within the autoregressive distributed lag (ARDL) framework, the bounds testing analysis indicated existence of co integration between economic growth and humancapital development indicators. Findings also show that humancapital development indicators had positive impact on economic growth in Nigeria within the reviewed periods; however, their impacts were largely statistically insignificant. Further evidence indicated that equilibrium is fully restored for any distortion in the short-run. On this basis of the emanating findings, this study proffered the need for government to invest more in humancapital development process and endeavours prioritize the health and education sectors budgeting considering their growth driving potentials in Nigeria. Similarly, government should endeavour to pay attention to the issue of school enrolment.
The United States, Japan and South Korea are facing the pressure of population aging, and corresponding policies and measures have been introduced to cope with this pressure. For example, in the 1990s, Japan launched the “Angel Project” to improve children’s day care services and other child-rearing services to cope with low fertility status, and to start the “Golden Plan” in 1990 to promote health and welfare services. South Korea’s fertility control policy continued to decline after it officially abolished the birth control policy in 1996, and there has not been a rebound. The government has expanded maternity leave and parental leave plans, day care services and so on. These incentive policies are not only to prevent the continuous decline of fertility levels, but more importantly, the aging of the population and the transformation of the old-age model have made the society must assume more important pension
For growth accounting analyses of China, the Barro and Lee procedure produces a measure of humancapital which is only slowly growing since increases in wage rates over time reflecting the opportunity cost of time involved in educational participation do not enter, as would be suggested by a Schultz (1960) formulation of humancapital. We therefore combine the methods of Barro and Lee (1993; 2000) and Gemmell (1996), also using a perpetual inventory approach to estimate humancapital stock in labor force. But we also treat humancapital in its original Schultz (1960) senses as the opportunity cost foregone when individuals acquire humancapital. Thus if a person with higher education spends sixteen years of formal education to accumulate his humancapital, the total cost of time spent plus fees for the sixteen years would be the value of his humancapital. Humancapital would thus include foregone earnings over these sixteen years, including the direct cost of education, such as tuition and fees. If we assume wt are counterfactual earnings in year t during education, total forgone earnings for these sixteen years are hi=∑twt, t ∈[t 0,t1], t1-t0=16. For all people who finish higher education in a year, the
The occurrence rate of such reclassification is difficult to predict in the future. A recent paper by Pradhan (2013) has estimated the number of villages that were classified as Census Town (CT) in the 2011 Census. The reclassification of villages to CT was based on three criteria, namely: population size, population density, and proportion of males working in non‐agriculture as main occupation. The paper estimates that almost 29.5% of the growth in urban population (91m) is due to the new CTs (Table 2 in Pradhan, 2013). No urban area in 2001 was found to be reclassified as a village by 2011. Overall, in India about 2553 new CT were reclassified from villages, with variation among states ranging from 0 (in Mizoram) and 1 (in Sikkim and Arunachal Pradesh 4 ) to 526 in West Bengal. In Kerala, 93% of urban growth was due to reclassification (346
A la lecture de ces résultats avec les deux méthodes, il en ressort que les variables population active, espérance de vie et les investissements directs étrangers ont des signes attendus et significatifs respectivement aux seuils de 1%, 5% et 10%. A ce sujet plusieurs arguments peuvent être avancés. Il semble que le niveau de santé que possède notre pays donne l’impression d’avoir atteint un niveau seuil pour satisfaire les besoins de développement économique (Dudjo, 2018b). Il est en conformité avec la plupart des résultats sur l’Afrique subsaharienne en particulier et les pays en développement en général. Allant dans le même sens que Barro (1996), une amélioration de l’état de santé diminue le taux de mortalité et de maladie, et par conséquent, réduit le taux de dépréciation du capital humain, composé de l’éducation et de la santé elle-même
The optimal amount a country should invest in human or physical capital is usually ana- lyzed through a basic aggregated one-sector framework, even though economists agree that this approach is too restrictive to describe the production process. Representing the whole economy through a one-sector structure does not allow sectoral differences and relative price adjustments between sectors to be considered. Empirical evidence suggests that sectoral relative prices vary (Hsieh and Klenow (2007)), especially between rich and poor economies. Valentinyi and Herren- dorf (2008) also show that factor intensity is sector-dependent in the US economy. Zuelta and Young (2012) emphasize that the US labor income share within the agricultural and manufactur- ing sector fell between 1958 and 1996 whereas it increased in the service sector. This means that the apparent stability of the US global labor share hides contrasted evolutions of sectoral labor shares.