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Tapping into Talent: Coupling Education and Innovation Policies for Economic Growth

Author

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  • Ufuk Akcigit

    (University of Chicago - Department of Economics; NBER; CEPR)

  • Jeremy Pearce

    (University of Chicago - Department of Economics)

  • Marta Prato

    (University of Chicago - Department of Economics)

Abstract

How do innovation and education policy affect individual career choice and aggregate productivity? This paper analyzes the various layers that connect R&D subsidies and higher education policy to productivity growth. We put the development of scarce talent and career choice at the center of a new endogenous growth framework with individual-level heterogeneity in talent, frictions, and preferences. We link the model to micro-level data from Denmark and uncover a host of facts about the links between talent, higher education, and innovation. We use these facts to calibrate the model and study counter-factual policy exercises. We find that R&D subsidies, while less effective than standard models, can be strengthened when combined with higher education policy that alleviates financial frictions for talented youth. Education and innovation policies not only alleviate different frictions, but also impact innovation at different time horizons. Education policy is also more effective in societies with high income inequality.

Suggested Citation

  • Ufuk Akcigit & Jeremy Pearce & Marta Prato, 2020. "Tapping into Talent: Coupling Education and Innovation Policies for Economic Growth," Working Papers 2020-137, Becker Friedman Institute for Research In Economics.
    • Handle: RePEc:bfi:wpaper:2020-137
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    References listed on IDEAS

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    Cited by:

    1. Ufuk Akcigit & Nathan Goldschlag, 2022. "Measuring the Characteristics and Employment Dynamics of U.S. Inventors," Working Papers 22-43, Center for Economic Studies, U.S. Census Bureau.
    2. Barbara Biasi & Song Ma, 2022. "The Education-Innovation Gap," CESifo Working Paper Series 9653, CESifo.
    3. Sarah McNamara & Guido Neidhoefer & Patrick Lehnert, 2024. "Intergenerational Mobility of Education in Europe: Geographical Patterns, Cohort-Linked Measures, and the Innovation Nexus," Economics of Education Working Paper Series 0211, University of Zurich, Department of Business Administration (IBW).
    4. Ufuk Akcigit & Nathan Goldschlag, 2023. "Where Have All the "Creative Talents" Gone? Employment Dynamics of US Inventors," Working Papers 23-17, Center for Economic Studies, U.S. Census Bureau.
    5. Burchardi, Konrad & Terry, Stephen & Chaney, Thomas & Tarquinio, Lisa & Hassan, Tarek, 2020. "Immigration, Innovation, and Growth," CEPR Discussion Papers 14719, C.E.P.R. Discussion Papers.
    6. Carlos Esteban Posada, 2020. "Cambio técnico y política económica: la teoría y el caso colombiano (1950-2019)," Documentos de Trabajo CIEF 18506, Universidad EAFIT.

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    More about this item

    Keywords

    R&D policy; education policy; inequality; innovation; iq; endogenous growth;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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