English, Article, Journal or magazine article edition: IQ in the Ramsey Model: A Naive Calibration Garett Jones

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Bookmark: http://trove.nla.gov.au/version/30628
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • IQ in the Ramsey Model: A Naive Calibration
Author
  • Garett Jones
Physical Description
  • preprint
Notes
  • I show that in a conventional Ramsey model, between one-fourth and one- half of income differences across countries can be explained by a single factor: The steady-state effect of large, persistent differences in national average IQ on worker productivity. These differences in cognitive ability--which are well-supported in the psychology literature--are likely to be malleable through better nutrition, better education, and better health care in the world’s poorest countries. A simple calibration exercise in the spirit of Bils and Klenow (2000) and Castro (2005) is conducted. According to the model, a move from the bottom decile of the global IQ distribution to the top decile will cause steady-state living standards to rise by between 75 and 350 percent. We provide evidence that little of IQ-productivity relationship is likely to be due to reverse causality.
  • Economic Growth, Intelligence, IQ, Ramsey.
  • RePEc:wpa:wuwpdc:0507004
  • RePEc:deg:conpap:c011_063
  • I show that in a conventional Ramsey model, between one-fourth and one-half of the global income distribution can be explained by a single factor: The effect of large, persistent differences in national average IQ on the private marginal product of labor. Thus, differences in national average IQ may be a driving force behind global income inequality. These persistent differences in cognitive ability--which are well-supported in the psychology literature--are likely to be somewhat malleable through better health care, better education, and especially better nutrition in the world’s poorest countries. A simple calibration exercise in the spirit of Bils and Klenow (2000) and Castro (2005) is conducted. I show that an IQ-augmented Ramsey model can explain more than half of the empirical relationship between national average IQ and GDP per worker. I provide evidence that little of the IQ-productivity relationship is likely to be due to reverse causality.
  • Human Capital, Intelligence, IQ, Economic Growth
  • RePEc:red:sed006:213
Language
  • English
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