Increasing returns, human capital, and the Kuznets curve

We present a simple model of human capital accumulation which generates the Kuznets curve as an equilibrium outcome. The central ingredient that helps generate the Kuznets curve in the model is what we call short-run increasing returns to scale in the learning technology. The learning technology exhibits increasing returns to scale, but only in the short run, since one of the factors of production, time, is bounded above by the endowment. We show that short-run increasing returns to scale is necessary to obtain the Kuznets curve, but not sufficient. (C) 1998 Elsevier Science B.V.