Chapter 5 Human Capital

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6 Terms

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What is the nature of human capital?

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<p>What is the model saying?</p>

What is the model saying?

As with previous computations, crux of the model is the equation you derive in Step 3: that steady state output is directly proportional to the measure of labour input, h

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<p>Prediction with respect to output per worker in the steady state. Why is this prediction lousy?</p>

Prediction with respect to output per worker in the steady state. Why is this prediction lousy?

  • A, g, n are not the same for all countries

  • Problem with measuring human capital (Barro & Lee measure)

  • The quality of schooling differs between countries (Teachers, Textbooks, Students)

  • There are externalities to human capital

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What is the effect of an exogenous shift in income?

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How does income affect health?

More income → improved nutrition; better access to safe water and sanitation; better-quality health care

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How does health affect income?

Through a number of mechanisms:

  • Labour productivity

  • Education

  • Savings

  • Demography