Human capital composition and long-run economic growth

Abstract

This study examines the impact of human capital composition on technological progress and its role in influencing the transition from stagnation to growth and the persistent income disparities across the globe. It posits that the trade-off between higher and lower education within an economy results in a trade-off between innovation and technology adoption. While highly educated individuals drive technological innovation, a workforce without adequate education can hinder technology adoption, thereby delaying the transition from stagnation to growth. Moreover, technology adoption complements technological progress especially in the modern era, when innovations are more challenging to adopt, thereby enhancing economic growth. This study provides empirical evidence to support the theoretical predictions. Overall, the findings form the basis for future studies on the critical role of human capital composition in economic development and offer novel insights for shaping education reforms at different stages of development.