IDEAS home Printed from https://ideas.repec.org/a/bpj/bejmac/v21y2021i2p659-694n13.html
   My bibliography  Save this article

Macrodynamic Modeling of Innovation Equilibria and Traps

Author

Listed:
  • Sanchez-Carrera Edgar J.

    (Department of Economics, Society, and Politics, The University of Urbino Carlo Bo, Urbino, Italy)

  • Ille Sebastian

    (Department of Economics, New College of the Humanities, London, UK)

  • Travaglini Giuseppe

    (Department of Economics, Society, and Politics, The University of Urbino Carlo Bo, Urbino, Italy)

Abstract

We study the interplay between the decision of firms to innovate and human capital. Based on a dynamic evolutionary model, we show that in the presence of a high stock of human capital, an advanced economy can remain caught in an “innovation trap”. Following the literature on endogenous growth, R&D investments and human capital are modeled as strategic complements. Skilled workers increase productivity and enjoy a wage premium if they are employed in the R&D sector, while they receive the same wage as unskilled workers if they are employed in the production sector. We model the evolutionary dynamics of the share of innovative firms and human capital to determine the conditions under which an economy converges to a high, low or mixed state of innovation.

Suggested Citation

  • Sanchez-Carrera Edgar J. & Ille Sebastian & Travaglini Giuseppe, 2021. "Macrodynamic Modeling of Innovation Equilibria and Traps," The B.E. Journal of Macroeconomics, De Gruyter, vol. 21(2), pages 659-694, June.
    • Handle: RePEc:bpj:bejmac:v:21:y:2021:i:2:p:659-694:n:13
    DOI: 10.1515/bejm-2020-0258
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/bejm-2020-0258
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/bejm-2020-0258?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bjørn Asheim & Lars Coenen & Jan Vang, 2007. "Face-to-Face, Buzz, and Knowledge Bases: Sociospatial Implications for Learning, Innovation, and Innovation Policy," Environment and Planning C, , vol. 25(5), pages 655-670, October.
    2. George Psacharopoulos & Harry Anthony Patrinos, 2018. "Returns to investment in education: a decennial review of the global literature," Education Economics, Taylor & Francis Journals, vol. 26(5), pages 445-458, September.
    3. Phillip Toner, 2011. "Workforce Skills and Innovation: An Overview of Major Themes in the Literature," OECD Science, Technology and Industry Working Papers 2011/1, OECD Publishing.
    4. Mark Bils, 2017. "Misallocation or Mismeasurement?," 2017 Meeting Papers 715, Society for Economic Dynamics.
    5. Phillip Toner, 2011. "Workforce Skills and Innovation: An Overview of Major Themes in the Literature," OECD Education Working Papers 55, OECD Publishing.
    6. Redding, Stephen, 1996. "The Low-Skill, Low-Quality Trap: Strategic Complementarities between Human Capital and R&D," Economic Journal, Royal Economic Society, vol. 106(435), pages 458-470, March.
    7. Jakob B. Madsen & Vinod Mishra & Russell Smyth, 2012. "Is The Output–Capital Ratio Constant In The Very Long Run?," Manchester School, University of Manchester, vol. 80(2), pages 210-236, March.
    8. repec:dau:papers:123456789/10093 is not listed on IDEAS
    9. repec:nbr:nberch:14019 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. McGuirk, Helen & Lenihan, Helena & Hart, Mark, 2015. "Measuring the impact of innovative human capital on small firms’ propensity to innovate," Research Policy, Elsevier, vol. 44(4), pages 965-976.
    2. Laura-Diana Radu, 2012. "Technological Innovation Management and its Role in Performance of Organizations," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 5(5), pages 95-103, October.
    3. Horbach, Jens & Rammer, Christian, 2020. "Labor shortage and innovation," ZEW Discussion Papers 20-009, ZEW - Leibniz Centre for European Economic Research.
    4. Soriano, Franklin A. & Villano, Renato A. & Fleming, Euan M. & Battese, George E., 2018. "What’s driving innovation in small businesses in Australia? The case of the food industry," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(01), October.
    5. Sungsup Ra & Brian Chin & Amy Liu, 2017. "Challenges and Opportunities for Skills Development in Asia: Changing Supply, Demand, and Mismatches," Working Papers id:11838, eSocialSciences.
    6. Jen Nelles & Kevin Walsh & Michalis Papazoglou, 2022. "FECs, innovation, and skills: A literature review," Insight Papers 012, The Productivity Institute.
    7. Valeria Cirillo & Lucrezia Fanti & Andrea Mina & Andrea Ricci, 2021. "Digitalizing Firms: Skills, Work Organization and the Adoption of New Enabling Technologies," LEM Papers Series 2021/04, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    8. John Jerrim & Álvaro Choi, 2013. "The mathematics skills of school children: how does England compare to the high performing east Asian jurisdictions?," Working Papers 2013/12, Institut d'Economia de Barcelona (IEB).
    9. Paolo Carioli & Dirk Czarnitzki, 2023. "Skills Shortage and Innovation Openness," Working Papers of ECOOM - Centre for Research and Development Monitoring 720361, KU Leuven, Faculty of Economics and Business (FEB), ECOOM - Centre for Research and Development Monitoring.
    10. Müller, Klaus & Thomä, Jörg, 2015. "Bedeutung der qualifikationsgebundenen Zugangsberechtigung im Handwerk für die Funktionsfähigkeit des dualen Ausbildungssystems," Göttinger Beiträge zur Handwerksforschung 4, Volkswirtschaftliches Institut für Mittelstand und Handwerk an der Universität Göttingen (ifh).
    11. Bao, May Xiaoyan & Cheng, Xiaoyan & Smith, David, 2020. "A path analysis investigation of the relationships between CEO pay ratios and firm performance mediated by employee satisfaction," Advances in accounting, Elsevier, vol. 48(C).
    12. Natalia Shmatko & Galina Volkova, 2020. "Bridging the Skill Gap in Robotics: Global and National Environment," SAGE Open, , vol. 10(3), pages 21582440209, September.
    13. Brunelle Marche & Vincent Boly & Roland Ortt, 2016. "Observing New Product Impacts On Sectors Value Chains: The Case Of A French Electronic Sme," Post-Print hal-01891016, HAL.
    14. Roya Taherifar & Mark J. Holmes & Gazi M. Hassan, 2021. "Is performance affected by the CEO-Employee pay gap? Evidence from Australia," Working Papers in Economics 21/14, University of Waikato.
    15. Medase, Kehinde, 2019. "The Impact of the Heterogeneity of Employees’ Qualifications on Firm-level Innovation Evidence from Nigerian Firms," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203563, Verein für Socialpolitik / German Economic Association.
    16. Pelucha, Martin & Kveton, Viktor & Potluka, Oto, 2019. "Using mixed method approach in measuring effects of training in firms: Case study of the European Social Fund support," Evaluation and Program Planning, Elsevier, vol. 73(C), pages 146-155.
    17. Jun Wen & Mingbo Zheng & Gen-Fu Feng & Sunwu Winfred Chen & Chun-Ping Chang, 2018. "Corruption And Innovation: Linear And Nonlinear Investigations Of Oecd Countries," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(01), pages 103-129, July.
    18. Nigel Driffield & Jun Du & Jan Godsell & Mark Hart & Katiuscia Lavoratori & Steven Roper & Irina Surdu & Wanrong Zhang, 2021. "Understanding productivity:Organisational Capital perspectives," Working Papers 013, The Productivity Institute.
    19. Jeetendra Khadan, 2018. "Estimating the Effects of Human Capital Constraints on Innovation in the Caribbean," Economies, MDPI, vol. 6(2), pages 1-18, May.
    20. Andrea Filippetti & Frederick Guy, 2016. "Risk-taking, skill diversity, and the quality of human capital: how insurance affects innovation," Papers in Evolutionary Economic Geography (PEEG) 1625, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Aug 2016.

    More about this item

    Keywords

    behavioral macroeconomics; evolutionary dynamics; innovative firms; institutions and growth;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejmac:v:21:y:2021:i:2:p:659-694:n:13. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.