American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Constrained Efficiency in a Human Capital Model
American Economic Journal: Macroeconomics
vol. 10,
no. 3, July 2018
(pp. 179–214)
Abstract
This paper investigates whether capital and human capital are over-accumulated in an incomplete market economy. As in Davila et al. (2012), whether capital is over-accumulated depends on how the pecuniary externalities affect insurance and redistribution. In a human capital economy, however, not only capital but also human capital generates externalities and an additional channel arises that has implications for the overaccumulation (under-accumulation) of capital (human capital). The income sources of the poor and the correlation between wealth and human capital are crucial for the implication of pecuniary externalities. Realistically calibrated models exhibit under-accumulation (overaccumulation) of capital (human capital).Citation
Park, Yena. 2018. "Constrained Efficiency in a Human Capital Model." American Economic Journal: Macroeconomics, 10 (3): 179–214. DOI: 10.1257/mac.20160405Additional Materials
JEL Classification
- D52 Incomplete Markets
- D62 Externalities
- I26 Returns to Education
- J22 Time Allocation and Labor Supply
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
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