Human capital and economic cycles

The interaction between human capital supply and the demand for human capital is modelled with a production block and a block describing the supply of labour. Both blocks have been explored empirically for the Netherlands on the basis of time-series. The production block includes time delays in adjustment of labour and in the adjustment of wages. Economic development has been simulated with this model assuming an international business cycle of 20 years which determines the maximum demand for products of the private sector. In the simulations particularly Government stabilization policy is effective in maximizing long-run growth.