Human Capital and Growth in Japan: Converging to the Steady State in a 1% World

35 Pages Posted: 2 May 2012 Last revised: 23 Feb 2014

See all articles by Theodore R. Breton

Theodore R. Breton

Universidad EAFIT - School of Economics and Finance - Center for Research in Economic & Finance (CIEF)

Date Written: October 2, 2013

Abstract

I use a dynamic Solow growth model, augmented with human capital, labor-hours, and oil prices, to show that Japan’s growth in GDP/adult over 1969-2007 can be explained as a process of convergence to a world steady-state rate of 1%/year. I find that each additional year of average schooling attainment during this period raised GDP/adult in Japan by 20 percent, which raised the annual growth rate by 1.8% in 1969, but by only 0.6% in 2007. I also show that redirecting national investment from physical capital to post-secondary schooling would be a cost-effective strategy to raise growth rates.

Keywords: Japan; Human Capital; Schooling; Productivity; Economic Growth; Convergence

JEL Classification: I25, O41, O53

Suggested Citation

Breton, Theodore R., Human Capital and Growth in Japan: Converging to the Steady State in a 1% World (October 2, 2013). Available at SSRN: https://ssrn.com/abstract=1547320 or http://dx.doi.org/10.2139/ssrn.1547320

Theodore R. Breton (Contact Author)

Universidad EAFIT - School of Economics and Finance - Center for Research in Economic & Finance (CIEF) ( email )

Carrera 49 No. 7 South - 50
Medellin
Colombia

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