A spatial-temporal model of human capital accumulation

We develop an overlapping generations model of human capital accumulation and analyze its spatial and temporal properties. The interplay between local spillovers of human capital and global market participation partitions the society into socio-economic classes. We focus upon stationary equilibria and show that a large class of them are locally stable. Stationary equilibria can be homogeneous (where the human capital distribution is degenerate) or stratified (with a distinct spatial pattern of human capital distribution). We provide several examples and specify conditions under which equilibria are sensitive to the spatial structure of the society. We illustrate our results by numerical simulations. Journal of Economic Literature Classification Numbers: D90, I21, J24, O15. (C) 2001 Academic Press.