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Education, Innovation, and Long-Run Growth

Author

Listed:
  • Katsuhiko Hori

    (Institute of Economic Research, Kyoto University)

  • Katsunori Yamada

    (Institute of Social and Economic Research, Osaka University)

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 asymmetric effects for subsidies on 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, 2011. "Education, Innovation, and Long-Run Growth," KIER Working Papers 798, Kyoto University, Institute of Economic Research.
  • Handle: RePEc:kyo:wpaper:798
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    More about this item

    Keywords

    Schumpeterian growth model; human capital accumulation; subsidies;
    All these keywords.

    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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