Theoretical Models of Human Capital and Economic Growth
Theoretical Models of Human Capital and Economic Growth
This chapter starts with a brief overview of the main characteristics of the basic growth model, the Solow–Swan model with exogenous technical change. It is considered to be the workhorse model of growth theory and is the main benchmark against which alternative and more refined models are gauged. In its basic form, the model describes a situation where there is zero growth in equilibrium and offers insights into why this is the case and how an economy can achieve alternative steady states characterized by positive growth rates. This chapter also discusses a concept important in theories of long-run economics, that of convergence. Convergence measures the path that some variable takes toward a particular value of interest. Absolute convergence deals with transition dynamics to the steady state. Conditional convergence implies that, conditional on their characteristics, economies will converge faster to their steady state the further away they are from it.
Keywords: Solow–Swan model, basic growth model, conditional convergence, absolute convergence
Stanford Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.
Please, subscribe or login to access full text content.
If you think you should have access to this title, please contact your librarian.
To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us.