Authors: Minoru Watanabe; Masaya Yasuoka
Addresses: School of Economics, Hokusei Gakuen University, Hokkaido, Japan ' School of Economics, Kwansei Gakuin University, Hyogo, Japan
Abstract: Based on individual occupational choice in the model including a production function with public investment, this paper presents an examination of how public investment affects the dynamics. Individuals work as skilled labourers or unskilled labourers. As in the model described by Caselli (1999), educational costs are necessary to work as a skilled labourer. Results show that life expectancy determines whether income growth occurs or not. Public investment can bring about income growth if life expectancy is sufficiently high. However, with low life expectancy, the government cannot bring about income growth with an increase in public investment. Therefore, both public investment and life expectancy should be pulled up for income growth.
Keywords: public investment; life expectancy; occupational choice; economic growth; skilled labourer; unskilled labourer; education; production function; dynamics.
African Journal of Economic and Sustainable Development, 2017 Vol.6 No.2/3, pp.216 - 224
Received: 08 Dec 2016
Accepted: 29 Oct 2017
Published online: 26 Feb 2018 *