Balanced growth despite Uzawa

Grossman, Gene M., Helpman, Elhanan, Oberfield, Ezra and Sampson, Thomas (2016) Balanced growth despite Uzawa. American Economic Review . ISSN 0002-8282 (In Press)

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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.

Item Type:	Article
Official URL:	https://www.aeaweb.org/journals/aer
Additional Information:	© 2016 American Economic Association
Library of Congress subject classification:	H Social Sciences > HC Economic History and Conditions
Sets:	Departments > Economics
Date Deposited:	18 Nov 2016 14:25
URL:	http://eprints.lse.ac.uk/68310/

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