The marginal product of human capital in Mankiw, Romer, and Weil's [1992] augmented Solow model measures the direct and two external effects of human capital created from schooling on national income. If this model is valid, its estimates of the share of this marginal product accruing to workers...

In 1960 Theodore Schultz expounded a human capital theory of economic growth that includes three elements: 1) Countries without much human capital cannot manage physical capital effectively, 2) Economic growth can only proceed if physical capital and human capital rise together, and 3) Human...

Structural change is a relatively simple (continuous) process having restricted limit-properties. All processes which can be classified as "structural change" inherit these limit-properties. Limit-properties of processes play an important role in neoclassical growth theory. We show that (i) many...

For 70 years, the participants in the Cambridge capital controversy have been arguing about the wrong things––the technical aspects of capital and whether they can support the neoclassical theory of distribution beyond the case of the corn model, a single homogeneous good as both input and...

This paper argues that investment-specific technological progress (ISTP) conventionally identified with the relative price of investment, inevitably correlate with neutral technological progress in heterogeneous production networks. Consequently, the ISTP is an elusive concept to examine the...

What accounts for the large gaps in aggregate productivity across countries? I study the impact of equity frictions and policy distortions on aggregate productivity, investments in productivity and average firm size. I document that economies with deeper equity markets have higher productivity,...

We use the two-sector specific factors model, which is known from the theory of international trade, in a growth context to describe major trends of long-run economic development. The endogenous technical progress functions establish the link between the agricultural and the manufacturing sector...

The paper combines Baumol's model of structural change with a model of aggregate demand growth in the Keynesian-Kaleckian tradition to predict the dynamics of aggregate employment. The model for the demand regime is estimated with - and Baumol's model for the productivity regime is calibrated on...

The paper formalizes the relation between flat taxes and growth when there is a competitive equilibrium tax evasion. A decentralized tax evasion service is supplied by the banking sector. The bank production function follows the financial intermediation microfoundation approach, with deposits as...