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Twin Engines of Growth

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Author Info

  • Huw Lloyd-Ellis
  • Joanne Roberts

Abstract

We develop an endogenous growth model in which new technology and new skills are bounded complements they complement each other up to a point, but beyond this the impact of each factor is constrained by the level of the other. As a result, both technological progress and human capital accumulation are necessary for sustained productivity growth, but neither alone is sufficient. Rapid technological progress generates increased returns to education and encourages each generation to spend more time in school. Rapid human capital accumulation increases the feasibility and profitability of innovation and encourages the private business sector to allocate more resources towards R&D. Our model has important implications for the effectiveness of alternative growth promoting policies, for the interpretation of the empirical relationship between growth and schooling, and for the relationship between growth and intergenerational wage dispersion. Keywords: Endogenous technological change, endogenous human capital accumulation, minimum skill requirements, bounded complementarity.

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Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number jorob-00-02.

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Length: 51 pages
Date of creation: 11 Jun 2000
Date of revision:
Handle: RePEc:tor:tecipa:jorob-00-02

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Keywords: Endogenous technological change; endogenous human capital accumulation; minimum skill requirements; bounded complementarity.;

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References

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  1. Segerstrom, Paul S, 1998. "Endogenous Growth without Scale Effects," American Economic Review, American Economic Association, vol. 88(5), pages 1290-1310, December.
  2. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
  3. Chari, V V & Hopenhayn, Hugo, 1991. "Vintage Human Capital, Growth, and the Diffusion of New Technology," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1142-65, December.
  4. Smulders, J.A. & Klundert, T.C.M.J. van de, 1995. "Imperfect competition, concentration and growth with firm-specific R&D," Open Access publications from Tilburg University urn:nbn:nl:ui:12-153407, Tilburg University.
  5. Galor, O. & Tsiddon, D., 1996. "Technological Progress, Mobility and Economic Growth," Papers 13-96, Tel Aviv.
  6. Huw Lloyd-Ellis, 1999. "Endogenous Technological Change and Wage Inequality," American Economic Review, American Economic Association, vol. 89(1), pages 47-77, March.
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Citations

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Cited by:
  1. Laura Diaconu, 2011. "The Role of Innovation for the Economic Growth and Development of the States. The Case of the Emerging Countries," ERSA conference papers ersa11p391, European Regional Science Association.
  2. Sergio Scicchitano, 2010. "Complementarity between heterogeneous human capital and R&D: can job-training avoid low development traps?," Empirica, Springer, vol. 37(4), pages 361-380, November.
  3. Nicolas Couderc & Nicolas Drouhin & Bruno Ventelou, 2006. "SIDA et croissance économique : le risque d'une « trappe épidémiologique »," Revue d'économie politique, Dalloz, vol. 0(5), pages 697-715.
  4. Luigi Reggi & Sergio Scicchitano, 2011. "European Regions Financing Public e-Services: the Case of EU Structural Funds," Working Papers 1110, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2011.
  5. Carmela Martin & Francisco J. Velazquez & Jorge Crespo., 2001. "The Role of International Technological Spillovers in the Economic Growth of the OECD Countries ," European Economy Group Working Papers 6, European Economy Group.
  6. Chris Papageorgiou & Fidel Perez-Sebastian, . "Human Capital and Convergence in a Non-Scale R&D Growth Model," Departmental Working Papers 2002-10, Department of Economics, Louisiana State University.
  7. repec:ebl:ecbull:v:15:y:2007:i:2:p:1-11 is not listed on IDEAS
  8. Stephen Kosempel, 2005. "Capital Mobility in an Open Economy Model with Embodied Productivity Growth," Working Papers 0506, University of Guelph, Department of Economics and Finance.
  9. Lloyd-Ellis, Huw & Roberts, Joanne, 2002. " Twin Engines of Growth: Skills and Technology as Equal Partners in Balanced Growth," Journal of Economic Growth, Springer, vol. 7(2), pages 87-115, June.
  10. Lutz G. Arnold, 2002. "On the Effectiveness of Growth-Enhancing Policies in a Model of Growth Without Scale Effects," German Economic Review, Verein für Socialpolitik, vol. 3(3), pages 339-346, 08.
  11. Lutz G. Arnold, 2006. "Does the Choice between Wage Inequality and Unemployment Affect Productivity Growth?," German Economic Review, Verein für Socialpolitik, vol. 7, pages 87-112, 02.
  12. Jorge Crespo & Carmela Martín & Francisco J. Velázquez, 2004. "International technology spillovers from trade: the importance of the technological gap," Investigaciones Economicas, Fundación SEPI, vol. 28(3), pages 515-533, September.

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