Human Capital and Development

Describe the theoretical role of human capital in macro-economic growth using the Solow Model

• Describe the mechanisms through which an individual’s health and education affect their income directly or indirectly, or the income of others in the economy (Note: pay attention to the externalities or spill over effects).

• Describe the correlation between human capital and income across countries. You can look up data on your own, or use illustrations from the class materials.

• What is the identification problem in getting causal estimates of human capital on development? Is there a selection bias?

• Carefully describe how a difference-in-difference strategy can be used to get causal effects of a health or education program on income.

• Think about the decision to invest in human capital. It typically involves paying a cost at present for a benefit in the future. What factors affect the decision to invest in human capital?

• How can credit availability induce investment in human capital?