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Resource-augmenting R&D with heterogeneous labor supply


The effective labor possibilities frontier (ELPF) is defined as the set of statically efficient allocations of labor inputs in the competing tasks of production and R&D. It is concave if labor is heterogeneous. In an R&D-based growth model with an essential non-renewable natural resource, the shape of the ELPF affects the optimal speed of the transition. If resource endowment is poor, transition is slower and involves a smaller R&D effort, and slower growth in per capita consumption, in the case of a heterogeneous labor force as compared to a homogeneous one. Policies that modify the distribution of skills in the population imply shifts of the ELPF. We provide a taxonomy of possible shifts of the ELPF, and link them to education policy or demographic trends.

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Article provided by Cambridge University Press in its journal Environment and Development Economics.

Volume (Year): 13 (2008)
Issue (Month): 06 (December)
Pages: 719-745

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Handle: RePEc:cup:endeec:v:13:y:2008:i:06:p:719-745_00
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