Abstract:
Scholars agree on the stylized fact that human capital and innovation are the decisive factors
that explain why some countries are rich and others remain poor (Aghion et al. 2009; Goldin
and Katz 2008; Goldin and Katz 1998; Jones and Romer, 2010). On the one hand, human
capital is seen as a substitute for technology: Better educated managers and workers are able
to increase production even when the technology they use is constant. On the other hand,
human capital is interpreted as an input in the R&D process and therefore rather a
complement to technology. According to this view, an increase in human capital will lead to
a more efficient adaption of superior technologies thereby shifting the frontier of the
production possibility set outwards.
