Human Capital and Innovation: A Model of Endogenous Growth With a 'Skill-Loss Effect'
Economics Bulletin, Vol. 3, No. 21, pp. 1-8, 2008
18 Pages Posted: 24 Sep 2007 Last revised: 1 Jul 2014
Date Written: September 1, 2007
Abstract
The present paper argues that, in line with Nelson-Phelps (1966), there exist important complementarities among educational attainment, R&D activities (and their derived innovations) and economic growth, although subject to a "skill-loss effect" (δ-effect), due to the presence of workers who have to perform jobs that require other capacities than the ones they have. Taking Redding's (1996) formal framework, the main result of our model suggests that the more distorted the labour market is, the stronger must be the investment in R&D necessary to attain a positive economic growth rate.
Keywords: endogenous growth, human capital, education
JEL Classification: O41, C0
Suggested Citation: Suggested Citation