This paper studies the effects of financial deepening and public spending on human capital formation, working hours and growth in a model with financial frictions and productivity heterogeneity. The paper first shows that in the range of capital tax rates that attains a balanced growth path,...

We first theoretically argue that labor force graying caused by younger workers shrinking and older workers growing lead to more acceptance of foreign workers. The empirical results from Japan's prefectural data support this theoretical prediction and suggest that on average a 10 percent fall...