Vintage Human Capital Growth, and the Diffusion of New Technology

This paper develops a model of vintage human capital in which each technology requires vintage specific skills. A stationary competitive equilibrium is defined, shown to exist, and be Pareto optimal. The stationary equilibrium is characterized by an endogenous distribution of skilled workers across vintages. The distribution is shown to be single peaked and, under general conditions there is a lag between the time when a technology appears and the peak of it’s usage, a phenomenon known as diffusion. An increase in the rate of exogenous technological change shifts the distribution of human capital to more recent vintages thereby increasing the diffusion rate._x000B__x000B_