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Human Capital and Economic Growth$
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Andreas Savvides and Thanasis Stengos

Print publication date: 2008

Print ISBN-13: 9780804755405

Published to Stanford Scholarship Online: June 2013

DOI: 10.11126/stanford/9780804755405.001.0001

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Threshold Effects, Multiple Equilibria, and Nonlinearities in Human Capital and Economic Growth

Threshold Effects, Multiple Equilibria, and Nonlinearities in Human Capital and Economic Growth

Chapter:
(p.84) 5 Threshold Effects, Multiple Equilibria, and Nonlinearities in Human Capital and Economic Growth
Source:
Human Capital and Economic Growth
Publisher:
Stanford University Press
DOI:10.11126/stanford/9780804755405.003.0005

This chapter examines the linearity assumption and raises the possibility that non-diminishing returns might lead to multiple steady-state equilibria or nonlinear dynamic behavior. It provides details to some of the main contributions to the literature on human capital and nonlinearities in growth. The second section looks at threshold effects and low-growth equilibrium traps. The third section discusses multiple growth regimes and Durlauf and Johnson's methodology which spearheaded the empirical literature in this area, and Benhabib and Spiegel's concept that the process of technological diffusion may result in multiple growth regimes. The fourth section describes the model of Redding that focuses on the complementarity between human capital and research and development and whose key result is also the possibility of a low-growth equilibrium trap.

Keywords:   non-diminishing returns, growth nonlinearities, human capital, low-growth equilibrium traps, multiple growth regimes, research and development

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