The level and growth effects of human capital in India

Abstract

In the extended Solow growth model of Mankiw et al. (1992), human capital has only permanent level and no growth effects. In the endogenous growth models human capital is a growth-improving variable. Human capital may have both a permanent level and a permanent growth effect, we show how both can be estimated with an extension to the Solow model.

Notes

¹This is slightly different from the one used by MRW where labour (L) and H are separated but helps to ease estimation.

²This specification was originally developed by Rao and used in his several empirical works; see the next footnote for references.

³GETS was extensively used in Rao and Rao (2009a) and Rao et al. (2009c) for growth models and Rao et al. (2009b) defend GETS over the time series methods.