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Education, Innovation, and Long-Run Growth

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  • Katsuhiko Hori
  • Katsunori Yamada

Abstract

This study augments a second-generation Schumpeterian growth model to employ human capital explicitly. We clarify the general-equilibrium interactions of subsidy policies to R&D and human capital accumulation in a unified framework. Despite a standard intuition that subsidizing these growth-enhancing activities is always mutually growth promoting, we find a symmetric effects for subsidieson R&D and those on education. Our theoretical result of asymmetric policy effects provides an important empirical caveat that empirical researchers may find false negative relationships between education subsidies and the output growth rate, if they merely rely on the standard human capital model.

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File URL: http://www.iser.osaka-u.ac.jp/library/dp/2009/DP0731RR.pdf
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Paper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number 0731.

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Date of creation: Feb 2009
Date of revision: Mar 2009
Handle: RePEc:dpr:wpaper:0731
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Find related papers by JEL classification:
  • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
  • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
  • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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  1. Marios Zachariadis, 2004. "R&D-induced Growth in the OECD?," Review of Development Economics, Wiley Blackwell, vol. 8(3), pages 423-439, 08.
  2. Stephen Machin & Kjell G. Salvanes & Panu Pelkonen, 2012. "Education And Mobility," Journal of the European Economic Association, European Economic Association, vol. 10(2), pages 417-450, 04.
  3. N. Gregory Mankiw & David Romer & David N. Weil, 1990. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
  4. James B. Ang & Jakob B. Madsen, 2011. "Can Second-Generation Endogenous Growth Models Explain the Productivity Trends and Knowledge Production in the Asian Miracle Economies?," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1360-1373, November.
  5. Peretto, Pietro F, 1998. " Technological Change and Population Growth," Journal of Economic Growth, Springer, vol. 3(4), pages 283-311, December.
  6. Jakob Madsen, 2008. "Semi-endogenous versus Schumpeterian growth models: testing the knowledge production function using international data," Journal of Economic Growth, Springer, vol. 13(1), pages 1-26, March.
  7. Sergio T. Rebelo, 1990. "Long Run Policy Analysis and Long Run Growth," NBER Working Papers 3325, National Bureau of Economic Research, Inc.
  8. Jakob B. Madsen & James B. Ang & Rajabrata Banerjee, 2010. "Four Centuries of British Economic Growth: The Roles of Technology and Population," CAMA Working Papers 2010-18, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  9. Nicolas Serrano-Velarde & Douglas Hanley & Ufuk Akcigit, 2011. "Back to Basics: Private and Public Investment in Basic R&D and Macroeconomic Growth," 2011 Meeting Papers 1196, Society for Economic Dynamics.
  10. Ulku, Hulya, 2005. "R&D, Innovation and Growth: Evidence from Four Manufacturing Sectors in OECD Countries," Development Economics and Public Policy Working Papers 30542, University of Manchester, Institute for Development Policy and Management (IDPM).
  11. repec:acb:camaaa:2010-05 is not listed on IDEAS
  12. Jinli Zeng, 2002. "Reexamining the Interaction between Innovation and Capital Accumulation," Departmental Working Papers wp0203, National University of Singapore, Department of Economics.
  13. Dinopoulos, Elias & Thompson, Peter, 1998. " Schumpeterian Growth without Scale Effects," Journal of Economic Growth, Springer, vol. 3(4), pages 313-35, December.
  14. Madsen, Jakob B., 2010. "The anatomy of growth in the OECD since 1870," Journal of Monetary Economics, Elsevier, vol. 57(6), pages 753-767, September.
  15. Volker Grossmann, 2004. "How to Promote R&D-based Growth? Public Education Expenditure on Scientists and Engineers versus R&D Subsidies," CESifo Working Paper Series 1225, CESifo Group Munich.
  16. Acemoglu, Daron, 1997. "Training and Innovation in an Imperfect Labour Market," Review of Economic Studies, Wiley Blackwell, vol. 64(3), pages 445-64, July.
  17. Connolly, Michelle & Peretto, Pietro F, 2003. " Industry and the Family: Two Engines of Growth," Journal of Economic Growth, Springer, vol. 8(1), pages 115-48, March.
  18. Arnold, Lutz G., 1998. "Growth, Welfare, and Trade in an Integrated Model of Human-Capital Accumulation and Research," Journal of Macroeconomics, Elsevier, vol. 20(1), pages 81-105, January.
  19. Sakakibara, Mariko & Branstetter, Lee, 2001. "Do Stronger Patents Induce More Innovation? Evidence from the 1988 Japanese Patent Law Reforms," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 77-100, Spring.
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