Human Capital

Question 1

Germany example

Answer 1

Germany post-WW2 with very quick recovery shows importance of human capital

Question 2

Glaeser

Answer 2

1. Human and physical capital accumulation ignite growth. Democracy and other institutional improvements are the consequences of increased education and wealth. Causality is human capital increasing then demands for institutional changes occur
2. Institutions can change quickly but outcomes take time eg. North vs South Korea - even after institutions had change, it took quite a long time for the effects to kick in
3. In developing countries, political institutions are more variable than human capital, so autocrats making benign choices is what generates growth
4. For the ‘reversal of institutions’ hypothesis, finds that human capital and education levels also determine level of economic performance

Question 3

Rocha et al

Answer 3

Use variation in settlement policies in Brazil to derive the long-run effects of human capital. In places with migrants with high human capital, the places remained better educated, had higher enrolment, with GDP being 15% higher even a hundred years later. They argue that this is due to the higher supply of educational inputs and shifts in the structure of occupations toward skill-intensive sectors

Question 4

Squicciarini and Voigtlander

Answer 4

The ‘upper tail’ human capital mattered for French industrialisation. Having more knowledgeable elites meant that manufacturers could keep up with advances at the technological frontier. Compared to the median level of human capital, which shifts the level of income but not the growth rate, the ‘upper tail’ matters more

Question 5

Hornung

Answer 5

Examines technological transfers by immigrants (the Hugeunots who left France for modern-day Germany / Poland), finding positive long-term effects of immigration on productivity and capital deepening. Argue that transfers of knowledge increased the rate of technological change, leading to a higher growth equilibrium

Question 6

Comin et al

Answer 6

Technological differences are surprisingly persistent over long periods of time; technology in 1500CE is strongly correlated with wealth today

Question 7

De La Croix et al

Answer 7

Superior institutions for the creation and dissemination of productive knowledge help explain the European advantage, particularly the person-to-person transmission of tacit knowledge, and the institutions such as the guild and the market which facilitate such effective transmission. VS regions that relied on the transmission of knowledge within closed kinship systems (extended families or clans)
1. Nuclear family equilibrium - no dissemination of knowledge, and innovation stays within the family
2. Clan equilibrium - some dissemination of knowledge
3. Guild equilibrium - a coalition of all masters, which provides enforcement mechanism and regulates apprenticeships
4. Market - outside authority which enforces contracts
Western Europe started with a nuclear family, transitioned to guild then market equilibrium, which allowed for broader knowledge dissemination and explains Europe’s knowledge advantage.

Question 8

Mokyr

Answer 8

The Enlightenment was a necessary condition for the Industrial Revolution as it generated and diffused useful knowledge, with the elite creating the steam engine. The Industrial Revolution then allowed 1) the expansion of useful knowledge, and 2) more open access to such knowledge - both such changes were revolutionary