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Social rewards in science and economic growth

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Author Info
Carillo, Maria Rosaria
Papagni, Erasmo

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Abstract

In this paper we put forward a model of basic research and long-run economic growth in which the incentives of social reward to scientific work may produce increasing returns and multiple equilibria. The state organizes production of new knowledge - a public good that improves firms' technology - with taxes on the private sector. Scientists compete with one another to attain priority over a discovery and be awarded both a real prize and prestige in the scientific community. Also, scientists\ derive job motivation from dedication to science which provides social status. Analysis of the model shows, on the one hand, a low equilibrium where the economy is endowed with a small science sector, researchers have high relative income but low prestige, and competition for discoveries is weak. On the other hand, there is a high equilibrium where the economy has a large science sector, scientists obtain for new findings high prestige but lower relative salaries and, as the effect of creative destruction is strong, there is fierce competition among researchers. Comparative statics shows that if the scientific infrastructure is poor, policies that increase the marginal benefits from a discovery have perverse effects, while policies aimed at improving the selection mechanism of researchers work well. \ The same policies have opposite effects at the high steady state.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2776.

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Date of creation: 28 Mar 2007
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Handle: RePEc:pra:mprapa:2776

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Related research
Keywords: Social reward; basic research; economic growth;

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

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    Other versions:
  3. Lazear, Edward P, 1997. "Incentives in Basic Research," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages S167-97, January. [Downloadable!] (restricted)
  4. Philippe Aghion & Mathias Dewatripont & Jeremy C. Stein, 2008. "Academic freedom, private-sector focus, and the process of innovation," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 617-635. [Downloadable!] (restricted)
    Other versions:
  5. Maria Rosaria Carillo & Erasmo Papagni & Fabian Capitanio, 2006. "Effects of social interactions on Scientists’ productivity," Discussion Papers 19_2006, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy. [Downloadable!]
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  6. Ong, Li Lian & Mitchell, Jason D, 2000. "Professors and Hamburgers: An International Comparison of Real Academic Salaries," Applied Economics, Taylor and Francis Journals, vol. 32(7), pages 869-76, June. [Downloadable!] (restricted)
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  9. Paula E. Stephan, 1996. "The Economics of Science," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1199-1235, September. [Downloadable!] (restricted)
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  11. Adams, James D, 1990. "Fundamental Stocks of Knowledge and Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 673-702, August. [Downloadable!] (restricted)
  12. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc. [Downloadable!]
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  14. Mansfield, Edwin, 1995. "Academic Research Underlying Industrial Innovations:," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 55-65, February. [Downloadable!] (restricted)
  15. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-51, March. [Downloadable!] (restricted)
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  16. Cole, Harold L & Mailath, George J & Postlewaite, Andrew, 1992. "Social Norms, Savings Behavior, and Growth," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1092-1125, December. [Downloadable!] (restricted)
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