Growth, distance to frontier and composition \nof human capital

Abstract

We examine the contribution of human capital to economy-wide technological \nimprovements through the two channels of innovation and imitation. \nWe develop a theoretical model showing that skilled labor has \na higher growth-enhancing effect closer to the technological frontier under \nthe reasonable assumption that innovation is a relatively more skill intensive \nactivity than imitation. Also, we provide evidence in favor of \nthis prediction using a panel dataset covering 19 OECD countries between \n1960 and 2000 and explain why previous empirical research had found no \npositive relationship between initial schooling level and subsequent growth \nin rich countries. In particular, we show that in OECD economies it is \ncrucial to isolate the two separate margins of primary/secondary and tertiary \neducation. Interestingly, the latter type of schooling proves to be a \nfactor of economic divergence.

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