A Beckerian model of household production is developed to study the cyclical allocation of capital and time between market and home activities. The adopted framework treats the business and household sectors symmetrically. In the market, labor interacts with business capital to produce market goods and services, and likewise at home the remaining time (leisure) is combined with household capital to produce home goods and services. The model presented is parameterized and simulated to see whether it can rationalize the observed allocation of capital and time, as well as other stylized facts, for the postwar U.S. economy. I.

This paper develops new economic models to synthesize and interpret the empirical literature on human skill formation. It presents simple formal economic models of child development that capture the essence of recent findings from the empirical literature. The goal of this essay is to provide a theoretical framework for interpreting the evidence from a vast empirical literature, for guiding the next generation of empirical studies, and for formulating policy. Central to our analysis is the concept that childhood has more than one stage, and that policies need to be tailored to each one. We formalize the concepts of self productivity and complementarity of human capital investments and use them to explain the evidence on skill formation. Together, they explain why skill begets skill through a skill multiplier process. Skill formation is a lifecycle process. It starts in the womb and goes on throughout most of the adult life. Families play a

Abstract not found

R01-HD32058-03, and the American Bar Foundation. Carneiro was funded by Fundacao Ciencia e Tecnologia and Fundacao Calouste Gulbenkian. We have beneÞted from comments received

This paper studies the relationship between population dynamics and economic growth. Prior to the Industrial Revolution increases in total output were roughly matched by increases in population. In contrast, during the last 150 years, increments in per capita income have coexisted with slow population growth. Why are income and population growth no longer positively correlated? This paper presents a new answer, based on the role of capital-specific technological change, that provides a unifying account of lower population growth and sustained economic growth. An overlapping generations model with capital-skill complementarity and endogenous fertility, mortality and education is constructed and parametrized to match English data. The key finding is that the observed fall in the relative price of capital accounts for more than 60% of the fall in fertility and over 50% of the increase in income per capita in England occurred during the demographic transition. Additioned experiments show that neutral technological change or the reduction in mortality cannot account for the fall in fertility.

Abstract not found

*Many aspects of this paper were inspired by the teaching, research, and guidance that we were privileged to receive from Zvi Griliches. We thank Melissa Powell and especially Joel Elvery for excellent research assistance, and we thank Kim Bayard, Gigi Foster, and Nicole Nestoriak for help in the construction of the DEED data set. Our long-term research with the data sets used in this paper has been supported by

This study of the determinants of earnings among adult foreign-born men using the 1990 Census of Population focuses on the effects of the respondent’s own English language skills, the effects of living in a linguistic concentration area, and the effects of the stage of the business cycle at entry into the U.S. labor market. The analysis demonstrates the importance of English language fluency among the foreign born from non-English speaking countries. Those who are fluent earn about 14 percent more than those who lack fluency, which is similar to the earnings differential in the 1980 Census. There is strong evidence for the complementarity between language skills and other forms of human capital. The partial effects on earnings of schooling, on-the-job-training, duration in the U.S., weeks worked and being married are greater for those who are more fluent in English. There is strong evidence using selectivity correction techniques for the endogeneity between language and earnings. Language skills are acquired in response to economic incentives. Earnings are lower in an area with a higher minority language concentration, especially among those with greater English language fluency. That is, living in an area in which many

This paper investigates a possibly fundamental aspect of technological progress. If knowledge accumulates as technology advances, then successive generations of innovators may face an increasing educational burden. Innovators can compensate through lengthening educational phases and narrowing expertise, but these responses come at the cost of reducing individual innovative capacities, with implications for the organization of innovative activity- a greater reliance on teamwork- and negative implications for growth. Building on this "burden of knowledge " mechanism, this paper first presents six facts about innovator behavior. I show that age at first invention, specialization, and teamwork increase over time in a large micro-data set of inventors. Furthermore, in cross-section, specialization and teamwork appear greater in deeper areas of knowledge while, surprisingly, age at first invention shows little variation across fields. A model then demonstrates how these facts can emerge in tandem. The theory further develops explicit implications for economic growth, providing an explanation for why productivity growth rates did not accelerate through the 20th century despite an enormous

Using unique Italian panel data, in which individual differences in behavior toward risk are measured from answers to a lottery question, we investigate if (and to what extent) risk aversion can explain differences in schooling attainments. We formulate the schooling decision process as a reduced-form dynamic discrete choice and we analyze how grade transition from one level to the next varies with preference heterogeneity (risk aversion), parental human capital, socioeconomic variables, market skills and persistent unobserved (to the econometrician) heterogeneity. We present evidence that schooling attainments decrease with risk aversion, but despite a statistically significant effect, differences in attitudes toward risk account for a modest portion of the probability of entering higher education. Differences in ability(ies) and in parental human capital are much more important. JEL Classification: J24. We thank David Card and Winfried Koeniger for useful comments.