Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Constrained Efficiency in a Human Capital Model†

Constrained Efficiency in a Human Capital Model† AbstractThis paper investigates whether capital and human capital are over-accumulated in an incomplete market economy. As in Dávila et al. (2012), whether capital is over-accumulated depends on how the pecuniary externalities affect insurance and redistribution. In a human capital economy, however, not only capital but also human capital generates externalities and an additional channel arises that has implications for the overaccumulation (under-accumulation) of capital (human capital). The income sources of the poor and the correlation between wealth and human capital are crucial for the implication of pecuniary externalities. Realistically calibrated models exhibit under-accumulation (overaccumulation) of capital (human capital). (JEL D52, D62, I26, J22, J24, J31) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Macroeconomics American Economic Association

Constrained Efficiency in a Human Capital Model†

American Economic Journal: Macroeconomics , Volume 10 (3) – Jul 1, 2018

Loading next page...
 
/lp/american-economic-association/constrained-efficiency-in-a-human-capital-model-DFhE1bQPRO
Publisher
American Economic Association
Copyright
Copyright © 2018 © American Economic Association
ISSN
1945-7715
DOI
10.1257/mac.20160405
Publisher site
See Article on Publisher Site

Abstract

AbstractThis paper investigates whether capital and human capital are over-accumulated in an incomplete market economy. As in Dávila et al. (2012), whether capital is over-accumulated depends on how the pecuniary externalities affect insurance and redistribution. In a human capital economy, however, not only capital but also human capital generates externalities and an additional channel arises that has implications for the overaccumulation (under-accumulation) of capital (human capital). The income sources of the poor and the correlation between wealth and human capital are crucial for the implication of pecuniary externalities. Realistically calibrated models exhibit under-accumulation (overaccumulation) of capital (human capital). (JEL D52, D62, I26, J22, J24, J31)

Journal

American Economic Journal: MacroeconomicsAmerican Economic Association

Published: Jul 1, 2018

There are no references for this article.