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An Horizontal Innovation Growth Model with Endogenous Time Allocation and Non-Stable Demography

Author

Listed:
  • Manuel Guerra
  • João Pereira
  • Miguel St. Aubyn

Abstract

We propose a decentralized endogenous growth model in order to study the transitional dynamics associated with the process of population aging in a small open economy, that has endogenous time allocation and two growth engines: R&D and human capital accumulation. Growth of per capita output is affected negatively by the difference in the rates of growth of labor force and of the total population in the period where the weight of the labor force decreases to a new and lower level. The biggest impact on per capita output growth should be during the period where labor force grows at a lower rate than the popu- lation unless it is compensated by some other effect. Under some assumptions, a decrease in the corporate tax improves growth.

Suggested Citation

  • Manuel Guerra & João Pereira & Miguel St. Aubyn, 2018. "An Horizontal Innovation Growth Model with Endogenous Time Allocation and Non-Stable Demography," Working Papers REM 2018/60, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
  • Handle: RePEc:ise:remwps:wp0602018
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    File URL: https://rem.rc.iseg.ulisboa.pt/wps/pdf/REM_WP_060_2018.pdf
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    More about this item

    Keywords

    Endogenous Growth; Demographic Changes; Time Allocation; Human Capital; R&D;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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