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Learning for Employment, Innovating for Growth

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  • Falkinger, Josef
  • Zweimüller, Josef

Abstract

We present a model in which workers have to be educated to get employed and firms have to innovate in order to increase productivity. Education as well as innovation and production require skilled labour as inputs. This and the fact that learning opportunities differ across workers determine simultaneously the long-run level of employment and the long-run rate of growth. We study the impact of changes in the education of workers and the incentives to innovate. Lower profits imply lower growth rates but not necessarily less employment. The effects of redistributive policy measures among workers depend on the form of redistribution. Subsidization of education increases employment and growth. Redistribution through the tax and benefit system or social net has the opposite effect.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1856.

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Date of creation: Apr 1998
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Handle: RePEc:cpr:ceprdp:1856

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Related research

Keywords: Education; Employment; Endogenous Growth; Innovation;

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  1. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
  2. Galor, Oded & Zeira, Joseph, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 35-52, January.
  3. C Bean & Christopher A. Pissarides, 1992. "Unemployment, Consumption and Growth," CEP Discussion Papers dp0100, Centre for Economic Performance, LSE.
  4. Atkinson, A-B, 1996. "Bringing Income Distribution in from the Cold," Economics Papers 117, Economics Group, Nuffield College, University of Oxford.
  5. Phelps, Edmund S & Zoega, Gylfi, 1997. "The Rise and Downward Trend of the Natural Rate," American Economic Review, American Economic Association, vol. 87(2), pages 283-89, May.
  6. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
  7. Cahuc, P. & Michel, P., 1992. "Minimum Wage, Unemployment and Growth," Papiers d'Economie Mathématique et Applications 92.35, Université Panthéon-Sorbonne (Paris 1).
  8. Arnold, Lutz G., 1998. "Growth, Welfare, and Trade in an Integrated Model of Human-Capital Accumulation and Research," Journal of Macroeconomics, Elsevier, vol. 20(1), pages 81-105, January.
  9. Eicher, Theo S, 1996. "Interaction between Endogenous Human Capital and Technological Change," Review of Economic Studies, Wiley Blackwell, vol. 63(1), pages 127-44, January.
  10. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, December.
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