No. 455 - Heterogeneity in human capital and economic growth

This paper explores the growth-enhancing role played by heterogeneity in human capital accumulation. It develops a growth model that takes into account more than one mechanism for accumulating human capital; in particular, schooling and on-the-job training are considered. The paper demonstrates that human capital composition, which is generally neglected in growth models, is important in determining the growth rate of the economy and, in particular, that complementarities between different types of human capital investment are important. Moreover, heterogeneity among workers, due to differences in human capital initial endowments, can change the growth rate of the economy.