Growth, Distance to Frontier and Composition of Human Capital∗
Jérôme Vandenbussche Harvard University, UCL and CERAS Philippe Aghion† Harvard University and IFS Costas Meghir University College London and IFS August 2004
Abstract We examine the contribution of human capital to economy-wide technological improvements through the two channels of innovation and imitation. We develop a theoretical model showing that skilled labor has a higher growth-enhancing effect closer to the technological frontier under the reasonable assumption that innovation is a relatively more skillintensive activity than imitation. Also, we provide evidence in favor of this prediction using a panel dataset covering 19 OECD countries between 1960 and 2000 and explain why previous empirical research had found no positive relationship between initial schooling level and subsequent growth in rich countries. In particular, we show that in OECD economies it is crucial to isolate the two separate margins of primary/secondary and tertiary education. Interestingly, the latter type of schooling proves to be a factor of economic divergence.

∗ JEL No: I20, O30, O40. Keywords: economic growth, human capital, education, imitation, innovation, convergence, technological frontier, wave. This research emerged from a request by the French Conseil d’Analyse Economique to produce a report on Education and Growth. We thank Jess Benhabib, Daniel Cohen, Elie Cohen, Mathias Dewatripont, Xavier Gabaix, Elhanan Helpman, Jean Pisani-Ferry, Chris Udry and Laura Valderrama for very helpful comments. The paper also benefited from the feedback of seminar participants at Fédération Paris-Jourdan, Harvard University, Universitat de Barcelona, UCL, UQAM, Yale University, the January 2004 AEA meetings in San Diego and the Januray 2004 PAI conference on higher education in Toulouse. We are grateful to Rafael Domenech, Guy Neave and Jim Snyder for sharing their data with us. The authors wish to thank the ESRC research