Education, Neighborhood Effects and Growth: An Agent-Based Model Approach

Advances in Complex Systems, Vol. 11, No. 1, pp. 99-117, 2008

Posted: 26 Apr 2010

See all articles by Miguel St. Aubyn

Miguel St. Aubyn

Technical University of Lisbon - ISEG (School of Economics and Management); UECE (Research Unit on Complexity and Economics)

Date Written: February 1, 2008

Abstract

Endogenous, ideas-led growth theory and the literature on agent-based modeling with neighborhood effects are crossed. In an economic overlapping generations framework, it is shown how social interactions and neighborhood effects are of vital importance in the endogenous determination of the long run number of skilled workers and therefore of the growth prospects of an economy. Neighborhood effects interact with the initial distribution of skilled agents across space and play a key role in the long run stabilization of the number of skilled individuals. Our model implies a tendency toward segregation, with a possibly positive influence on growth, if team effects operate. The long run growth rate is also shown to depend on the rate of time preference. Initial circumstances are of vital importance for long run outcomes. A poor initial education endowment will imply a long run reduced number of skilled workers and a mediocre growth rate, so there is no economic convergence tendency. On the contrary, poor societies will grow less, or will even fall into a poverty trap, and will diverge continuously from richer ones.

Keywords: Agent modeling, economic growth, education, human capital, neighborhood effects, poverty trap

Suggested Citation

St. Aubyn, Miguel, Education, Neighborhood Effects and Growth: An Agent-Based Model Approach (February 1, 2008). Advances in Complex Systems, Vol. 11, No. 1, pp. 99-117, 2008, Available at SSRN: https://ssrn.com/abstract=1505095

Miguel St. Aubyn (Contact Author)

Technical University of Lisbon - ISEG (School of Economics and Management) ( email )

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1200-071 Lisboa
Portugal
+351 21 392 5987 (Phone)

HOME PAGE: http://www.iseg.utl.pt/~mstaubyn

UECE (Research Unit on Complexity and Economics)

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Portugal
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