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Technology frontier, labor productivity and economic growth: Evidence from OECD countries

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  • Théophile T. Azomahou
  • Bity Diene
  • Mbaye Diene

    () (CREA, University of Luxembourg)

Abstract

We use 29 OECD countries data spanning over 1960-2000 to study the growth strategy when countries are close to the technology frontier. Relying on a semi-parametric generalized additive model, we estimate labor productivity equations. We find that the number of agents enrolled in higher education is a determinant of growth. Moreover, when a country is sufficiently near the technology frontier thanks to an increasing R&D expenditure, it becomes optimal to invest in fundamental research, since after a short period of efficiency, business R&D can no longer ensure the transition toward the technology frontier, while higher education presents the opposite shape. These findings support the main assertion of Aghion and Cohen (2004) that countries which are near the technology frontier have to invest in higher education while those far away from the frontier make their technology level growing up by investing in primary and secondary schooling.

Suggested Citation

  • Théophile T. Azomahou & Bity Diene & Mbaye Diene, 2009. "Technology frontier, labor productivity and economic growth: Evidence from OECD countries," CREA Discussion Paper Series 09-19, Center for Research in Economic Analysis, University of Luxembourg.
  • Handle: RePEc:luc:wpaper:09-19
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    File URL: http://wwwen.uni.lu/content/download/24335/294833/file/2009-19_Technology%20frontier,%20labor%20productivity%20and%20economic%20growth_Evidence%20from%20OECD%20countries.pdf
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    References listed on IDEAS

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    1. Linton, Oliver B., 2000. "Efficient Estimation Of Generalized Additive Nonparametric Regression Models," Econometric Theory, Cambridge University Press, vol. 16(04), pages 502-523, August.
    2. Hardle, Wolfgang & Linton, Oliver, 1986. "Applied nonparametric methods," Handbook of Econometrics,in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 38, pages 2295-2339 Elsevier.
    3. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, pages 407-437.
    4. Eric A. Hanushek & Dongwook Kim, 1995. "Schooling, Labor Force Quality, and Economic Growth," NBER Working Papers 5399, National Bureau of Economic Research, Inc.
    5. Boucekkine, Raouf & de la Croix, David & Licandro, Omar, 2002. "Vintage Human Capital, Demographic Trends, and Endogenous Growth," Journal of Economic Theory, Elsevier, vol. 104(2), pages 340-375, June.
    6. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, December.
    7. Horowitz, Joel L., 2001. "The Bootstrap," Handbook of Econometrics,in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 52, pages 3159-3228 Elsevier.
    8. Hardle, Wolfgang & Linton, Oliver, 1986. "Applied nonparametric methods," Handbook of Econometrics,in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 38, pages 2295-2339 Elsevier.
    9. Andrea Bassanini & Stefano Scarpetta, 2003. "Les moteurs de la croissance dans les pays de l'OCDE : Analyse empirique sur des données de panel," Revue économique de l'OCDE, Éditions OCDE, pages 7-58.
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    Cited by:

    1. Douanla Tayo, Lionel & AbomoFouda, Marcel Olivier, 2016. "Government spending in education and economic growth in Cameroon. A Vector error Correction Model approach," MPRA Paper 61881, University Library of Munich, Germany.
    2. Douanla Tayo, Lionel & Abomo Fouda, Marcel Olivier, 2015. "Government spending in education and economic growth in Cameroon:a Vector error Correction Model approach," MPRA Paper 62008, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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