Endogenous growth with R&D and human capital: The role of returns to scale

Creina Day*, Steve Dowricky

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)

Abstract

Recent modelling of endogenous growth allows for both endogenous creation of ideas for new technology through R&D and endogenous accumulation of human capital. This paper extends the literature by addressing two counterfactual predictions and reconsidering the need for a policy trade-off where R&D and human capital formation draw on the same resources. Our two-knowledge-sector model of endogenous growth allows R&D and human capital formation to use the same inputs and returns to scale to vary across sectors. We find that growth in ideas will outstrip growth in individual skill even if population growth ceases, the level of per capita income is increasing in technology and reallocating resources to R&D unambiguously raises growth in per capita income.

Original languageEnglish
Pages (from-to)312-322
Number of pages11
JournalOxford Economic Papers
Volume65
Issue number2
DOIs
Publication statusPublished - Apr 2013

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