Human capital productivity and uncertainty

Mbaye Diene (1) , Bity Diene (2) , Théophile Azomahou (3)

1 UCAD - Université Cheikh Anta Diop de Dakar [Sénégal]
2 CERDI - Centre d'Études et de Recherches sur le Développement International
3 UNU-MERIT - UNU-MERIT

Several policies or interventions have been implemented in developing countries with the ultimate goal of improving educational outcomes and human capital. While lots of empirical studies have pointed to mixed results of these interventions, the role of uncertainty arising from the state of the nature about educational environment, household characteristics, along- side the efficiency of these interventions still lack economic mechanism. This paper aims at developing a theoretical framework that links policy interventions to educational outcomes. We characterize optimal policies and determine the conditions for enhancing social welfare. We also study the optimal growth of the economy under uncertainty and population heterogeneity when human capital is produced and used in the education sector. We show that the growth rate of the unskilled population has a direct impact on the growth of human and physical capitals.

Keywords: Educational outcome; policy interventions; social welfare; endogenous growth; skilled and unskilled labor

Domains: Economics and Finance

Mbaye Diene, Bity Diene, Théophile Azomahou. Human capital productivity and uncertainty. 2015. ⟨halshs-01144990⟩