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I explore the effects of economic and political integration on economic growth in a model of vintage human capital and sequential intergenerational bargains. Adoption of a new technology raises not only the productivity but also the bargaining position of the future generations, creating a bias for the current generations to preserve the current technology. Economic integration (i.e., the sharing of frontier technology among countries) promotes growth if there is a diversity in human capital distribution or a coordination failure across countries. On the other hand, political integration (i.e., the merging of countries into a single bargain) promotes stagnation as it eliminates the diversity and coordination failures.

We show that business education/occupations have expanded and that technical education/occupations have contracted in the Czech Republic and Poland since 1990. We interpret these changes as an adjustment necessary for their transition to a market economy. We do not find the same pattern in Hungary, which we attribute to the earlier timing of its transition. We construct an aggregate model in which labour reallocates in response to changing demand structure. When calibrated with the Czech and Polish data, the model generates a large movement of workers with technical education and experience into business occupations in the early 1990s. The discounted sum of output loss due to the gap between the demand structure and the composition of existing human capital amounts to between 8 and 40 percent of 1990 GDP.

I propose the aggregate output divided by the wage rate of an industrial laborer in a country as a measure of the aggregate human capital input for that country. I use this method to compare the human capital inputs for 45 countries of diverse output levels. I find that human capital input differs between the lowest-income and the highest-income countries by a factor of 2.2 or 2.8, depending on the inclusion of outlier countries. This is significant but small relative to the results from the method based on years of schooling.

I study the choice of technology adoption in an environment where human capital is transmitted from the old to the young generation, but the young generation can opt out for a new technology. The adoption and matching decisions are made in a sequential intergenerational bargaining. Since technology adoption benefits future generations who do not participate in the bargaining, there is an inherent bias toward preserving the current technology. The main result is that economic integration (i.e., the sharing of frontier technology among countries) promotes growth while political integration (i.e., the merging of countries into a single bargaining) promotes stagnation.

I propose the aggregate output divided by the wage rate of the industrial labourer in a country as a measure of the aggregate human capital input for that country. The justification is that the skills and the health of industrial labourers are comparable across countries; therefore their human capital input can serve as a unit in the measurement. For international comparison, this method is better than other methods based on schooling, conceptually or in terms of applicability, given the data constraints for low-income countries. I use this method to compare the human capital inputs for 39 countries of diverse output levels. I find that human capital input differs between the lowest-income and the highest-income countries by a factor of about 2. This is significant but small relative to their output difference or the results from other methods. In neoclassical output accounting, the human capital input differences across countries, even after being combined with their physical capital input differences, leave a large pat of their output differences unaccounted for.