Idea Flows, Economic Growth and Human Capital (with Robert E. Lucas Jr.) - Job Market Paper [draft]

This paper introduces a new theoretical model, fully consistent with Mincer's work and many others, in which human capital accumulation accounts for all economic growth. In our model workers gain productive skills over their careers, through random meetings with others which they adopt or not as they choose. Differences among worker abilities will lead to variations in schooling choices which we will compare to U.S. census earnings data over the decades 1940,...,2010.

Ideas, Growth and Investment in Human Capital [in progress]

This paper develops a theory of idea flows, where the ability to learn from others gives rise to sustained economic growth. The model, based on Lucas (2009) and Gabriel and Lucas (2019), has a cohort structure and incorporates a specific role for formal schooling. Investment in human capital plays two roles: it makes individuals more productive at the start of their careers, and it develops them into better learners for the rest of their working lives. A calibration of the model, applied to the empirical regularities in US census earnings discovered by Mincer (1958), is considered.

Differential Taxation in Monetary Economies with Search Frictions [draft]

As a way of thinking about The Cash Demand Puzzle, we develop a simple model of a money and credit economy with search frictions and differential taxes on cash and credit. We study the implications for the modified bargaining problem and show that for low enough values of the nominal interest rate, buyers do not use credit in a monetary equilibrium, in contrast to canonical models where buyers primarily use credit and cash can only play a role when credit is scarce. For higher values of the nominal interest rate, in a monetary equilibrium where credit is used, we show that taxation of cash is contractionary on output, but taxation of credit is neutral and that the intra period timing of taxation matters.