We study an imitation game of strategic complementarities between the percentage of high-skilled workers and innovative firms, namely, human capital and R&D, respectively. We show that this model has two pure Nash equilibria, one of them with high investment in R&D and skilled workers while the other one, which we interpret as poverty trap, exhibits lack of skills and underinvestment. Furthermore, we show that we can avoid the poverty trap if the number of innovative firms is larger than a threshold value allowing an increment of the number of skilled workers
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Find related papers by JEL classification: C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
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