. problems occur if the contributions of human labour and capital calculated in this way are applied to two countries at a different level of development. in such cases, there is a significant degree of divergence between the characteristics of these economies observed in reality and predicted by the model. it had been clear for a relatively long time that if the share of human labour in output was only one - third, solow ’ s model would provide a very good picture of reality in international comparison. to overcome this inconsistency, however, it was necessary to come up with the idea of introducing a new variable in the model that would represent human capital. although this may seem obvious today – as such things always seem to be as soon as someone else thinks of them – it was a novelty in the late 1980s. it was another nobel prize laureate in economics robert lucas who divided human labour into a part reflecting people ’ s general capacity for work, and the contribution of human capital that was a result of previous investment in education. what lucas did was very simple from today ’ s point of view. using the extensive structure of us economic data, he chose the average wage of people with basic education as a basic remuneration of people ’ s capacity for work. then he gradually added the average wage of other people after each finished year of education. the results showed that every additional year of education up to the level of a bachelor ’ s degree increases the wage by 8 % on average. in the united states, if you finish high school and obtain a bachelor ’ s degree, which means you invest eight years in education, you can look forward to a wage two - thirds higher than the wage you would get if you only finished basic education. although lucas ’ s calculations didn ’ t include subsequent stages of education, as the bachelor ’ s degree was sufficient to reduce the share of basic human labour in output and improve solow ’ s original concept, it ’ s clear that things don ’ t stop at the bachelor ’ s degree. on the contrary, one could say, it seems that a simple linear relationship ceases to be valid here, and every additional year brings an even higher wage increase compared to the previous years. regardless of the size of the increase, investment in education is by no means an empty slogan. i wish you that you all become a living proof of this.

mr. greenspan comments on the importance of technological development and the value of education for economic growth in the united states remarks by the chairman of the us federal reserve system, mr. alan greenspan, at the building dedication ceremonies at the kenan - flagler business school, university of north carolina on 12 / 9 / 97. i welcome the opportunity to join dean fulton, president broad, president emeritus spangler, chancellor hooker, hugh mccoll, and the many other distinguished guests on the podium today. it isn ’ t every day that we have the opportunity to dedicate a new building devoted to the research and training that our young people need for conducting business in a global setting. this new facility - - the mccoll bulding - - has been equipped with state - of - the - art information technology that will enhance the ability of the faculty and students of kenan - flagler to prepare for an exciting future in our global economy. the university has made this important commitment at a time when our businesses and workers are confronting a dynamic set of forces that will influence our nation ’ s ability to compete worldwide in the years ahead. one of the most central of these forces is the rapid acceleration of computer and telecommunications technologies, which can be reasonably expected to appreciably raise our standard of living in the twenty - first century. in the short run, however, the fallout from rapidly changing technology is an environment in which the stock of plant and equipment with which most managers and workers interact is turning over increasingly rapidly, rendering a perception that human skills are becoming obsolete at a rate perhaps unprecedented in american history. i shall endeavor to place this most unusual phenomenon in the context of the broader changes in our economy and, hopefully, explain why the value of education, especially to enhance advanced skills, is so vital to the future growth of our economy. wealth has always been created, virtually by definition, when individuals use their growing knowledge to interact with an expanding capital stock to produce goods and services of value. assisted by the whole array of market prices, entrepreneurs seek to identify the types of products and services that individuals will value, especially the added value placed on products and services that customers find better tailored to their particular needs, delivered in shorter time frames, or improved in quality. this striving to unbundle the particular characteristics of goods and services in order to maximize their value to each individual inevitably results in the shift toward value created through the exploitation of ideas and concepts, rather than simply the utilization of