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Heterogeneous Human Capital, Growth and Trade

Heterogeneous Human Capital, Growth and Trade. Cheng-Te Lee Dept. of International Trade, Chinese Cultural University, Taiwan Deng-Shing Huang Institute of Economics, Academia Sinica, Taiwan. 1. Literatures/Motivations. The diversity of human capital can matter for the POT and growth.

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Heterogeneous Human Capital, Growth and Trade

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  1. Heterogeneous Human Capital, Growth and Trade Cheng-Te Lee Dept. of International Trade, Chinese Cultural University, Taiwan Deng-Shing Huang Institute of Economics, Academia Sinica, Taiwan

  2. 1. Literatures/Motivations • The diversity of human capital can matter for the POT and growth. • Diversity and Trade (Grossman & Maggie 2000AER, Grossman 2004JPE) • Labors with different talent • Industry-specific module of tasks-combination • Conventional Industries (motor)// skill-clustering • Newly developed (software)// cross-matching • Diversity and Growth (Das 2005) • Diversity speeds up growth

  3. 1. Literatures/Motivations (cont.) Diversity and Trade (Grossman & Maggie 2000AER, Grossman 2004JPE) Labors with different talent Industry-specific module of tasks-combination Conventional Industries (motor)// skill-clustering Newly developed (software)// cross-matching Results: Diversity  Comp. Adv in Cross-Matching goods (Diversity Eff.) Diversity and Growth (Das 2005) Theory: Diversity speeds up growth (if R&D is cross-matching) Evidence: Diverse HC not necessary High Growth (Not consistent with the real world) (Why? Communication gap higher if HC more diverse  lower growth// Das 2005)

  4. Real World Data • Fact: For human capital, countries differ not only in diversity but also in Kurtosis • Type 1: One of the countries has higher 95th/5th and higher 75th/25th than the other; for example, U.S.A. vs. Germany (denoted as DEU). • Type 2: One of the pair countries has higher 95th/5th but lower 75th/25th than the other; for example, Canada vs. U.S.A.

  5. Human Capital Distribution

  6. Talent Distribution b for Diversity εsmaller  higher Kurtosis

  7. Talent Distribution b for Diversity εsmaller  higher Kurtosis Type 1: More diverse/ lower Kurtosis

  8. Talent Distribution b for Diversity εsmaller  higher Kurtosis Type 2: More Diverse and greater Kurtosis

  9. Types of Distribution Diff. • Type 1: a country with more diverse human capital but with lower kurtosis than its pair country (in Grossman & Maggi (2000) Grossman (2004) and Das (2005)) • Type 2: a country with more diverse human capital and higher kurtosis than the others (not yet considered in the literature) 本文

  10. Correlation (HC Distribution, Growth Rate)

  11. Main Findings • Diversity Effect Diversity  Comp. Adv. in Submodular (S-goods) ‧Pattern of Trade (more likely to Export S) ‧Growth (higher growth rate, if R&D is S-goods) • Kurtosis Effect Kurtosis  Comp. Adv. in Supermodular C-goods) Opposite to the Diversity Effects Theme: Kurtosis difference  why an more diversity economy may have lower growth rate. (Explain the discrepancy between theoretical results and empirical observations.)

  12. 2. Model • A small-open economy • Labor with hetero talent symmetric distribution • 2 sectors (C&S) / 2 tasks Yi=η Fi (tx, tv) • Consumption sector C supermodular (skill-clustering : employing identical-skill workers) • R&D sector S submodular （Cross-matching: most-  least-talented）

  13. Model (cont.) Talent Dist.

  14. Talent Distribution b for Diversity εsmaller  higher Kurtosis

  15. Talent Dist. & Employment C employs labor with t around average of S employs labor of most- and least-talented • Approach: • Given t^  m(t^) • yc and ys solved • PPF Yc=f(Ys) • Given P=Pc/Ps • MRT= Pc/Ps • Yc/Ys • Export function • Growth rate C sector

  16. Case 1: C employs labor with t around average of S employs labor of most- and least-talented C sector

  17. Case 2 C employs labor with t around average of S employs labor of most- and least-talented C sector

  18. C employs labor with t around average of (t) S employs labor of most- and least-talented Case 1: C C C C S S

  19. Case 1: . Assume: income-tax τand fully funds the new blueprints (S) MRT

  20. Case I (cont.) • The export function of good S: • (6) • The growth rate: • (7) Only b affects the growth rate. Kurtosis has no effect at all.// conventional results

  21. Given t^  m(t^) • yc and ys solved • Export function • Growth rate S C C S S S Case II: Labor division for C-sector & S-sector

  22. Case II (Cont.) • The export function of good S: • (11) • The growth rate: • (12) Both b and ε matters for growth rate.

  23. 3. More Diverse and Higher Kurtosis Talent Distribution

  24. More Diverse, Higher Kurtosis, POT and Growth • Case Ι: • POT (14) • Growth (15)

  25. More Diverse, Higher Kurtosis, POT and Growth • Case II: • POT (16) • Growth (17) Higher b and Kurtosis (lower ε)  Lower Growth rate.

  26. 4. Concluding Remarks • More diverse and higher kurtosis talent distribution leads to change in POT and lower growth rate. (Case II) • Kurtosis Effect dominates the diversity effect.

  27. 報告完畢 敬請指教

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