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Twin Engines of Growth

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  • 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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  2. Smulders, Sjak & van de Klundert, Theo, 1995. "Imperfect competition, concentration and growth with firm-specific R & D," European Economic Review, Elsevier, vol. 39(1), pages 139-160, January.
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  7. Daron Acemoglu & Joshua Angrist, 1999. "How Large are the Social Returns to Education? Evidence from Compulsory Schooling Laws," Working papers 99-30, Massachusetts Institute of Technology (MIT), Department of Economics.
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  26. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  27. Huw Lloyd-Ellis, 1999. "Endogenous Technological Change and Wage Inequality," American Economic Review, American Economic Association, vol. 89(1), pages 47-77, March.
  28. Claudia Goldin & Lawrence F. Katz, 1996. "The Origins of Technology-Skill Complementarity," NBER Working Papers 5657, National Bureau of Economic Research, Inc.
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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. repec:ebl:ecbull:v:15:y:2007:i:2:p:1-11 is not listed on IDEAS
  3. 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.
  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. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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.
  11. 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.
  12. 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.

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