Technological Change, investment in Human Capital, and Economic Growth.

This paper presents a theoretical model to analyze the effects of technology change on growth rates of income and human capital. We set up an overlapping generations model in which young agents invest in both width and depth of human capital in order to adopt new technologies. The model develops explicitly the micro-mechanism of the role of human capital in adopting new technologies as well as that of the process of human capital production. In our model an increase in the technology uncertainty decreases growth rates of income and human capital by lowering efficiencies both in creating new knowledge and in adopting new technologies.