Economic growth and economic development 487

Introduction to Modern Economic Growth h(t) h* h(0) t Figure 10.2 Time path of human capital investments in the simplified Ben Porath model time in training programs or allocating some of his time on the job to learning rather than production Moreover, because the horizon is finite, if the Inada conditions were relaxed, the individual could prefer to stop investing in human capital at some point As a result, the time path of human capital generated by the standard Ben Porath model may be hump-shaped, with a possibly declining portion at the end (see Exercise 10.6) Instead, the path of human capital (and the earning potential of the individual) in the current model is always increasing as shown in Figure 10.2 The importance of the Ben Porath model is twofold First, it emphasizes that schooling is not the only way in which individuals can invest in human capital and there is a continuity between schooling investments and other investments in human capital Second, it suggests that in societies where schooling investments are high we may also expect higher levels of on-the-job investments in human capital Thus there may be systematic mismeasurement of the amount or the quality human capital across societies 473