Endogenous growth and relative to entrepreneurial and professional human capital

Abstract

We develop a growth model in which both entrepreneurial and professional human capital contribute to long-term endogenous economic growth and the growth rate depends on the ratio of returns to the two types of human capital. A testable theoretical result is that the growth rate is negatively related to the ratio of professional human capital returns to entrepreneurial-human capital returns if the ratio is below its steady state value, and vice versa. the empirical result with Singapore industries favors further deepening of investment in professional human capital relative to entrepreneurial type. The cross-sectional regression with the international data produces the evidence for a negative relationship between the growth rate and the human-capital-return ratio determined by the level of GDP.