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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.

Suggested Citation

  • Katsuhiko Hori & Katsunori Yamada, 2009. "Education, Innovation, and Long-Run Growth," ISER Discussion Paper 0731rr, Institute of Social and Economic Research, The University of Osaka, revised Nov 2011.
    • Handle: RePEc:dpr:wpaper:0731rr
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    References listed on IDEAS

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