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Twin Engines of Growth

We develop an endogenous growth model in which new technology and new skills are bounded complements -- they complement each other 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 at school. Rapid human capital accumulation increases the feasability 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. Nous développons un modèle de croissance endogène dans lequel la nouvelle technologie et les nouvelles compétences sont des compléments limités -- elles se complémentent jusqu'à un certain point, au delà duquel l'impact de chaque facteur est contraint par le niveau de l'autre. Alors, le progrès technologique et l'accumulation de capital humain sont nécessaires les deux pour une croissance soutenue de la productivité, mais aucun n'est suffisant seul. Un progrès technologique rapide génère des rendements croissants de l'éducation et encourage chaque génération à consacrer plus de temps à l'école. Une accumulation rapide de capital humain accroît la faisabilité et la profitabilité de l'innovation et encourage le secteur privé à allouer plus de ressources en recherche et développement. Notre modèle a des implications importantes pour la relation empirique entre croissance et éducation, et pour la relation entre croissance et dispersion intergénérationnelle des salaires.

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Paper provided by CREFE, Université du Québec à Montréal in its series Cahiers de recherche CREFE / CREFE Working Papers with number 118.

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Length: 43 pages
Date of creation: Jun 2000
Date of revision:
Handle: RePEc:cre:crefwp:118
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  12. Daron Acemoglu & Joshua Angrist, 1999. "How Large are the Social Returns to Education? Evidence from Compulsory Schooling Laws," NBER Working Papers 7444, National Bureau of Economic Research, Inc.
  13. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
  14. Segerstrom, Paul S, 1998. "Endogenous Growth without Scale Effects," American Economic Review, American Economic Association, vol. 88(5), pages 1290-1310, December.
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  17. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
  18. Galor, Oded & Tsiddon, Daniel, 1997. "Technological Progress, Mobility, and Economic Growth," American Economic Review, American Economic Association, vol. 87(3), pages 363-82, June.
  19. Mark Bils & Peter J. Klenow, 1998. "Does Schooling Cause Growth or the Other Way Around?," NBER Working Papers 6393, National Bureau of Economic Research, Inc.
  20. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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  22. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
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  24. Claudia Goldin & Lawrence F. Katz, 1996. "The Origins of Technology-Skill Complementarity," NBER Working Papers 5657, National Bureau of Economic Research, Inc.
  25. Charles I. Jones, . "Growth: With or Without Scale Effects?," Working Papers 99001, Stanford University, Department of Economics.
  26. Theo S. Eicher, 1996. "Interaction Between Endogenous Human Capital and Technological Change," Review of Economic Studies, Oxford University Press, vol. 63(1), pages 127-144.
  27. Parente Stephen L., 1994. "Technology Adoption, Learning-by-Doing, and Economic Growth," Journal of Economic Theory, Elsevier, vol. 63(2), pages 346-369, August.
  28. Peter Howitt, 2000. "Endogenous Growth and Cross-Country Income Differences," American Economic Review, American Economic Association, vol. 90(4), pages 829-846, September.
  29. Bartel, Ann P & Lichtenberg, Frank R, 1987. "The Comparative Advantage of Educated Workers in Implementing New Technology," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 1-11, February.
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  31. Theo S. Eicher, 1996. "Interaction Between Endogenous Human Capital and Technological Change," Review of Economic Studies, Oxford University Press, vol. 63(1), pages 127-144.
  32. Nancy L. Stokey, 1991. "Human Capital, Product Quality, and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 587-616.
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