7. Human Capital, Religion, and Economic Growth

This chapter extends the basic OLG growth model of Chap.​ 2 by introducing human capital formation and religious participation. In contrast to the R&D models of the new growth theory the human capital approach based on Lucas’ (Journal of Monetary Economics, 22, 3–42, 1988) seminal contribution helps to explain non-converging GDP per capita across countries despite an unhampered international diffusion of technological knowledge. From the FOCs of households and firms and market clearing conditions the fundamental equations of motion for physical capital and the education time per period will be deduced and the existence of non-trivial steady states will be explored. In the model with human capital formation and religious participation a close relationship between educational attainment and religious participation will be argued and religion will be pointed out as a steady-state phenomenon despite the sociological secularization hypothesis.