The Transition from Physical to Human Capital, Institutional Change and Economic Growth

The work is devoted to the study of human capital as a factor of long-term economic growth. It examines the mechanisms of its formation and its impact not only on quantitative growth indicators such as per capita output, but also on the quality indicators of this growth - the formation of inclusive institutions, the level of economic inequality and social mobility in society. The paper presents a model of endogenous growth, describing the transition from physical capital to human capital, as the main growth factor. The model has an endogenous institution of public education, heterogeneity of human capital in individuals, caused by differences in cognitive abilities, social mobility, allowing some dynasties to maintain their elite status, despite institutional and structural economic changes, as well as the positive effects of the externalities of human capital. The paper produced a numerical simulation with various exogenous parameters of the model, on the basis of which the qualitative impact of these parameters on the main indicators of the model's economy was evaluated. Taking into account the identified patterns, measures of socio-economic policy aimed at accelerating economic development were proposed, and a cross-country analysis of the dynamics of the level of inequality was carried out.