Human Capital, Investment and Innovation: What Are the Connections?
Fingold and Soskice (1988) argue that Britain is trapped in a "low-skills" equilibrium. In Redding (1996), this notion is formalized in a dynamic model which relies on strategic complementarities between firms' investments in R&D and workers' investments in human capital. In this paper, we investigate the firms' side of the story, notably wheher their investments in fixed capital and R&D are influenced by the avilability of human capital.
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