Essays on endogenous growth, economic openness and labor allocation

Chapter 1. This chapter introduces a simple endogenous growth model. It is based on Romer (1990), but extends the original model by incorporating individual workers skill heterogeneity. Based on the heterogeneity, the model has a labor allocation mechanism between skilled (research) and less-skilled (production) sectors. Different from Romer (1990) and Acemoglu (1998), this labor allocation is determined by both demand and supply conditions of the economy. This labor allocation determines long-run growth rate of the economy. The model shows how the distribution of human capital affects on the labor allocation, and hence on the economic growth and income distribution. The model can be extended to an open economy. With the heterogeneity, the extended model can explain distributional effect as well as growth effect of the economic openness.;Chapter 2. This chapter provides empirical evidence in support of the previous model presented in the chapter 1. Based on MRW(92)'s specification, the human capital measures that I use in this chapter show better performance in explaining the role of human capital on a country's income per worker. The distinguishing feature of these human capital measures is that they consider both the shape of the skill distribution and the skill demand condition. The proposed human capital measures also perform better in growth regressions. When the three specifications based on three different models (augmented Solow, Nelson and Phelps, and Romer) are implemented using a panel of 45 countries, the human capital measures based on the endogenous growth model provide the most significant relation between human capital and economic growth.;Chapter 3. This chapter provides empirical evidence in support of the extension part of the previous model presented in the chapter 1. Based on endogenous growth framework as proposed by Romer (1990) and Rivera-Batiz and Romer (1991), the previous model explains how economic openness affects labor allocation between skilled and less-skilled sector. According to the model, economic openness can affect labor allocation through two channels; knowledge spillover and specialization. First, the openness promotes knowledge spillovers and hence increases the productivity of workers in the skilled sectors. This makes the economy employs more workers in the skilled sector. On the other hand, the openness causes global specialization which leads more employment in the skilled sector for the advanced countries but at the same time, leads less employment in the skilled sector for the less-advanced countries since the less-advanced countries have comparative advantages in the less-skilled sector. The empirical results obtained using cross country panel data in this chapter support these two effects of knowledge spillover and specialization.