TECHNOLOGY, TRADE, AND GROWTH: THE ROLE OF EDUCATION

We generalize a trade model with firm-specific heterogeneity and R&D-based growth to allow for endogenous education and fertility. The framework is able to explain cross-country differences in living standards and trade intensities by the differential pace of human capital accumulation among ind...

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Bibliographic Details
Published inMacroeconomic dynamics Vol. 20; no. 5; pp. 1381 - 1394
Main Authors Prettner, Klaus, Strulik, Holger
Format Journal Article
LanguageEnglish
Published New York, USA Cambridge University Press 01.07.2016
Subjects
Economic growth
Economic models
Economic theory
Education
Fertility
GDP
Globalization
Gross Domestic Product
Growth models
Human capital
Macroeconomics
Per capita
Population growth
Prosperity
Skilled workers
Standard of living
Studies
Technology
Technological Progress
Education
Globalization
Demographic Change
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Summary:We generalize a trade model with firm-specific heterogeneity and R&D-based growth to allow for endogenous education and fertility. The framework is able to explain cross-country differences in living standards and trade intensities by the differential pace of human capital accumulation among industrialized countries. Consistent with the empirical evidence, scale matters for relative economic prosperity as long as countries are closed, whereas scale does not matter in a fully globalized world. The average human capital of a country, by contrast, influences its relative economic prosperity irrespective of trade-openness.
ISSN:1365-1005
1469-8056
DOI:10.1017/S1365100514000856