Publication Type
Working Paper
Version
publishedVersion
Publication Date
12-2001
Abstract
We argue that the degree of substitutability between skilled and unskilled workers in production increases long-term income growth rate. Growth rate reaches its maximum when such factors are perfect substitutes, but falls to zero when they are perfect complements. This model brings together the diverging relative wage and the human-capital-growth literature. Easier substitution absorbs more workers into the skilled profession, and their training fuels human capital accumulation and growth. Our result implies, among other things, that growth is positively related to between-and within-group inequality.
Keywords
Growth, factor substitution, skilled/unskilled wage
Discipline
Economics | Macroeconomics
Research Areas
Macroeconomics
First Page
1
Last Page
25
Citation
LEUNG, Hing-Man.
Factor Substitution and Endogenous Growth. (2001). 1-25.
Available at: https://ink.library.smu.edu.sg/soe_research/700
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.