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Entrepreneurial Innovation and Sustained Long-run Growth without Weak or Strong Scale Effects

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Author Info
Volker Grossmann ()

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Abstract

R&D-based growth theory suggests that a larger population size raises either the long-run rate of economic growth (“strong scale effect”) or the level of per capita income (“weak scale effect”), with far-reaching policy implications. However, for modern times there is little empirical support for strong scale effects and evidence in favor of weak scale effects is mixed, at best. This paper develops a simple overlapping-generations framework with endogenous occupational choice of heterogeneous agents and entrepreneurial innovations in which any form of scale effect is absent. A higher population growth rate has a negligible, possibly negative effect on the long-run growth rate of per capita income. Long-run growth is sustained also in absence of population growth and generally is policy-dependent.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 2264.

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Date of creation: 2008
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Handle: RePEc:ces:ceswps:_2264

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Related research
Keywords: economic growth; endogenous technical change; entrepreneurial skills; population growth; scale effects;

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Find related papers by JEL classification:
O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Grossmann, Volker & Stadelmann, David, 2008. "International Mobility of the Highly Skilled, Endogenous R&D, and Public Infrastructure Investment," IZA Discussion Papers 3366, Institute for the Study of Labor (IZA). [Downloadable!]
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