gender differential paper IJCRB

ijcrb.webs.com
INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS
JUNE 2011
VOL 3, NO 2
model which has been introduced by Mankiw-Romer-Weil. Mankiw-Romer-Weil (1992) generalized Solo's growth
model and inserted human capital and technology directly in to the production function. Physical capabilities of the
labor force are just considered in Solo model but in this model (MRW) education, skills and etc are considered in
addition to physical capabilities. On the other side, technology gives rise to increase productivity and production
power of the labor force, while by lower labor force we can have access to the same level of production or higher
than that which is called Labor-Augmenting Technical Progress. In other words, we can say that Mankiw-Romer-
Weil made technology endogenous and this leaded to neutralizing of descending productivity of the work factor.
As it is obvious the major barrier of economic growth in neoclassic growth models has been descending
productivity. One way to be released of descending productivity is supposing of a production function that is not
exposed to descending productivity for example a function like AK and other models that have made progress of
technology as endogenous. Generally, we can consider weak points of Solo's neoclassic model in un-inclusion of
these two facts: 1- Technology progress is the achievement of individuals' work and it is not possible to perceive
discoveries totally as pure general product. 2- Growth convergence hasn't been confirmed experimentally. Robert
Locus (1988) and Paul Rumour (1990) recalled that reason of this failure was that economists were not able to put
two major classic assumptions beside each other: one is that changes of technology are exogenous and the other is
that technological opportunities are available equally for all countries in the world (Rumour, 1990). Endogenous
growth models are generally based on AK model and Ro/Lu/Re/Ba (AK model includes models of Rumour (1978),
Lucas (1988), Reblu (1991) and Barrou (1991) that are stated as Ro/Lu/Re/Ba) and R&D model and Ro/G.H/A.H
(because this model is based on models of Rumour (1990), Grassman & Heliman (1991) and Aghiun & Hawitt
(1992), it is stated as Ro/G.H/A.H for easiness). However, because many factors like education, technology,
business organization, research and development activities, culture, international business growth, governmental and
local policy are effective on major elements of economic growth (investment, labor force and technology) in
endogenous growth models we can say that they have no certain and precise primary hypothesis. While the used
method by Mankiw-Romer-Weill is applied in this article in order to remove the problem of the neoclassic model,
endogenous growth model is not considered and MRW will be emphasized. Generalized Solo model will be studied
in the next section.
5. Mankiw‐Romer‐Weil Model 4
Mankiw, Romer, and Weil (1992) extended the Solow–Swan model to consider the role of human capital. The
extended model assumes that the aggregate output function includes three inputs: physical capital, human capital,
and labor measured in efficiency units. In this model framework, human capital contributes directly to production.
The production function exhibits constant returns to scale in the three inputs but diminishing returns in the
reproducible inputs (physical and human capital):
(1)
(2)
4 -Savvides and Stengos, 2009
COPY RIGHT © 2011 Institute of Interdisciplinary Business Research 176