References and Literature
The concept of human capital is due to Ted Shultz (1965), Gary Becker (1965), and Jacob Mincer (1974). The standard models of human capital, used extensively in labor economics and in other areas economics, have been developed by Becker (1965), Mincer (1974) and Yoram Ben-Porath (1967).
These models have been the basis of the first three sections of this chapter. Recently there has been a renewed interest in the Ben-Porath model among macroeconomists. Two recent contributions include Manuelli and Seshadri (2005) and Guvenen and Kuruscu (2006). These models make parametric assumptions (Cobb-Douglas functional forms) and try to gauge the quantitative implications of the Ben-Porath model for cross-country income differences and for the evolution on wage inequality, respectively. Manuelli and Seshadri (2005) also emphasize how differences in on-the-job training investments will create systematic differences in unmeasured human capital across countries and argue that once these “quality” differences are taken into account, human capital differences could explain a very large fraction of cross-country income differences. Caselli (2006), on the other hand, argues that quality differences are unlikely to increase the contribution of human capital to aggregate productivity.There is a large literature on returns to schooling. As noted in the text and also in Chapter 3, this literature typically finds that one more year of schooling increases earnings by about 6 to 10% (see, for example, the survey in Card, 1999).
There is also a large literature on capital-skill complementarity. The idea was first put forward and empirically supported in Griliches (1969). Katz and Autor (1999) summarize more recent evidence on as capital-skill complementarities.
Technological human capital externalities are emphasized in Jacobs (1965), Lucas (1988), Azariadis and Drazen (1990), while pecuniary human capital externalities were first discussed by Marshall (1961), who argued that increasing the geographic concentration of specialized inputs increases productivity since the matching between factor inputs and industries is improved. Models of pecuniary human capital externalities are constructed in Acemoglu (1996, 1997a).
The model with capital-skill complementarity and labor market imperfections is based on Acemoglu (1996), who provides a more detailed and microfounded model leading to similar results to those presented in Section 10.6 and derives the results on pecuniary externalities and human capital externalities.The empirical literature on human capital externalities includes Rauch (1993), Acemoglu and Angrist (2000), Duflo (2004), Moretti (2002) and Ciccone and Perri (2006).
The role of human capital in adapting to change and implementing new technologies was first suggested by Schultz (1965) in the context of agricultural technologies (he emphasized the role of ability rather than human capital and stressed the importance of “disequilibrium”
situations). Nelson and Phelps (1966) formulated the same ideas and presented a simple model, essentially identical to that presented in Section 10.8 above. Foster and Rosenzweig (1995) provide evidence consistent with this role of human capital. Benhabib and Spiegel (1994) and Aghion and Howitt (1999) also include extensive discussions of the Nelson-Phelps view of human capital. Recent macroeconomic models that feature this role of human capital include Galor and Tsiddon (1997), Greenwood and Yorukoglu (1997), Caselli (1999), Galor and Moav (2001), and Aghion, Howitt and Violante (2004).
10.11.
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