Publication detail

A Model of Human Capital, Time Discounting and Economic Growth

Author(s): doc. PhDr. Michal Bauer Ph.D.,
doc. PhDr. Julie Chytilová Ph.D.,
Type: IES Working Papers
Year: 2008
Number: 14
Published in: IES Working Papers 14/2008
Publishing place: Prague
Keywords: growth, human capital, education, time discounting, discount rate, poverty
JEL codes: D9, I2, O1
Suggested Citation: Bauer, P., Chytilová, J. (2008). “ A Model of Human Capital, Time Discounting and Economic Growth ” IES Working Paper 14/2008. IES FSV. Charles University.
Grants: IES Research Framework Institutional task (2005-2011) Integration of the Czech economy into European union and its development
Abstract: Endogenous time discounting is introduced in a two-period human-capital-driven growth model: subjective discount rate depends upon the level of human capital. This assumption accords strongly with the micro-level evidence. In the model an individual optimizes consumption over two periods. Low human capital societies do not grow fast since high discount rate discourages schooling as the major form of savings. This implication is further reinforced by modeling the efficiency of schooling in the context of population pressure which is also driven by low human capital. The model may produce multiple development regimes and it illustrates wider role of education in tackling possible development traps.
Downloadable: WP 2008_14_Bauer, Chytilova




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