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Introduction to Modern Economic Growth The final issue relates to the role of human capital In Section 10.8, we discussed the Nelson-Phelps view of human capital, which emphasizes the role of skills in facilitating the adoption and implementation of new technologies While this perspective is likely to be important in a range of situations, it seems that, in the absence of significant external effects, this particular role of human capital should not lead to a major mismeasurement of the contribution of human capital to aggregate productivity either, especially, in the types of exercises reported in Chapter This chapter has also contributed to our quest towards understanding the sources of economic growth and cross-country income differences We now have arrived to a relatively simple and useful framework for understanding both physical and human capital accumulation decisions Our next task is to develop models for the other major proximate source of economic growth and income differences; technology Before doing this, however, we will have our first look at models of sustained longrun growth 10.10 References and Literature The concept of human capital is due to Ted Shultz (1965), Gary Becker (1965), and Jacob Mincer (1974) The standard models of human capital, used extensively in labor economics and in other areas economics, have been developed by Becker (1965), Mincer (1974) and Yoram Ben Porath (1967) These models have been the basis of the first three sections of this chapter Recently there has been a renewed interest in the Ben Porath model among macroeconomists Two recent contributions include Manuelli and Seshadri (2005) and Guvenen and Kuruscu (2006) These models make parametric assumptions (Cobb-Douglas functional forms) and try to gauge the quantitative implications of the Ben Porath model for cross-country income differences and for the evolution on wage inequality, respectively Manuelli and Seshadri (2005) also emphasize how differences in on-the-job training investments will create systematic differences in unmeasured human capital across countries and argue that once these “quality” differences are taken into account, human capital differences could explain a very large fraction of cross-country income differences 500