Saturday, 19 March 2011: 18:00
The seminal notion of human capital dates back to Smith and Pigou. The current meaning has been specified and popularized by Becker in his influential book Human Capital published in 1964. Today, the term of human capital refers to the level of education and the state of health of a given individual. Expenditures in education and intellectual training on the one hand, and, on the other hand, medical cares and physical training improve the productivity of workers and represent investments in human capital because during the life span the higher productivity results in higher wages. So the human capital is determined by the intertemporal arbitrage between the additional cost of investing in education and health and the discounted stream of incremental wages induced by these expenditures.
Pollution matters essentially because of three effects. First, it lowers the life expectancy and then the number of periods over which the discounting is computed. Second and third, it reduces the physical and mental performances within a period, respectively. In short, it lowers the stock of human capital.
In order to study the interplay between growth and pollution, we set up a model where growth is endogenous. In addition, since we are interested in the effects of pollution on growth through health and education, we built an endogenous growth model with human capital in the spirit of Lucas [1988].
To understand the role of pollution on human capital accumulation, we need to compare dynamics with and without pollution. Comparing these dynamics allows us to highlight the short-run and the long-run impact of pollution, in terms of fluctuations and growth, respectively.
Pollution matters essentially because of three effects. First, it lowers the life expectancy and then the number of periods over which the discounting is computed. Second and third, it reduces the physical and mental performances within a period, respectively. In short, it lowers the stock of human capital.
In order to study the interplay between growth and pollution, we set up a model where growth is endogenous. In addition, since we are interested in the effects of pollution on growth through health and education, we built an endogenous growth model with human capital in the spirit of Lucas [1988].
To understand the role of pollution on human capital accumulation, we need to compare dynamics with and without pollution. Comparing these dynamics allows us to highlight the short-run and the long-run impact of pollution, in terms of fluctuations and growth, respectively.