American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Balanced Growth Despite Uzawa
American Economic Review
vol. 107,
no. 4, April 2017
(pp. 1293–1312)
Abstract
The evidence for the United States points to balanced growth despite falling investment good prices and a less-than-unitary elasticity of substitution between capital and labor. This is inconsistent with the Uzawa Growth Theorem. We extend Uzawa's theorem to show that the introduction of human capital accumulation in the standard way does not resolve the puzzle. However, balanced growth is possible if education is endogenous and capital is more complementary with schooling than with raw labor. We present a class of aggregate production functions for which a neoclassical growth model with capital-augmenting technological progress and endogenous schooling converges to a balanced growth path.Citation
Grossman, Gene M., Elhanan Helpman, Ezra Oberfield, and Thomas Sampson. 2017. "Balanced Growth Despite Uzawa." American Economic Review, 107 (4): 1293–1312. DOI: 10.1257/aer.20151739Additional Materials
JEL Classification
- E22 Investment; Capital; Intangible Capital; Capacity
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- I26 Returns to Education
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- O33 Technological Change: Choices and Consequences; Diffusion Processes
- O41 One, Two, and Multisector Growth Models
- O47 Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence