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Estimated human capital externalities in an endogenous growth framework


Malley, Jim; Woitek, Ulrich (2019). Estimated human capital externalities in an endogenous growth framework. CESifo Working Papers 7603, CESifo.

Abstract

To better understand the quantitative implications of human capital externalities at the aggregate level, we estimate a two-sector endogenous growth model with knowledge spill-overs. To achieve this, we account for trend growth in a model consistent fashion and employ a Markov-chain Monte-Carlo (MCMC) algorithm to estimate the model's posterior parameter distributions. Using U.S. quarterly data from 1964-2017, we find significant positive externalities to aggregate human capital. Our analysis further shows that eliminating this market failure leads to sizeable increases in education-time, endogenous growth and aggregate welfare.

Abstract

To better understand the quantitative implications of human capital externalities at the aggregate level, we estimate a two-sector endogenous growth model with knowledge spill-overs. To achieve this, we account for trend growth in a model consistent fashion and employ a Markov-chain Monte-Carlo (MCMC) algorithm to estimate the model's posterior parameter distributions. Using U.S. quarterly data from 1964-2017, we find significant positive externalities to aggregate human capital. Our analysis further shows that eliminating this market failure leads to sizeable increases in education-time, endogenous growth and aggregate welfare.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:Human capital externalities, endogenous growth, Bayesian estimation
Language:English
Date:April 2019
Deposited On:12 Feb 2020 14:26
Last Modified:12 Feb 2020 14:31
Series Name:CESifo Working Papers
Number of Pages:43
ISSN:2364‐1428
OA Status:Green
Official URL:https://www.cesifo.org/en/publikationen/2019/working-paper/estimated-human-capital-externalities-endogenous-growth-framework

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