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Tapping into Talent: Coupling Education and Innovation Policies for Economic Growth

Author

Listed:
  • Ufuk Akcigit
  • Jeremy G. Pearce
  • Marta Prato

Abstract

How do innovation and education policy affect individual career choice and aggregate productivity? This paper analyzes the various layers that connect R&D subsidies and higher education policy to productivity growth. We put the development of scarce talent and career choice at the center of a new endogenous growth framework with individual-level heterogeneity in talent, frictions, and preferences. We link the model to micro-level data from Denmark and uncover a host of facts about the links between talent, higher education, and innovation. We use these facts to calibrate the model and study counterfactual policy exercises. We find that R&D subsidies, while less effective than standard models, can be strengthened when combined with higher education policy that alleviates financial frictions for talented youth. Education and innovation policies not only alleviate different frictions, but also impact innovation at different time horizons. Education policy is also more effective in societies with high income inequality.

Suggested Citation

  • Ufuk Akcigit & Jeremy G. Pearce & Marta Prato, 2020. "Tapping into Talent: Coupling Education and Innovation Policies for Economic Growth," NBER Working Papers 27862, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:27862
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    Cited by:

    1. Elodie Andrieu & John Morrow, 2024. "Can Firm Subsidies Spread Growth?," PSE Working Papers halshs-04747880, HAL.
    2. Kang, Yankun & Leng, Xuan & Liao, Yunxiang & Zheng, Shilin, 2024. "Information disclosure, spillovers, and knowledge accumulation," China Economic Review, Elsevier, vol. 84(C).
    3. Sarah McNamara & Guido Neidhoefer & Patrick Lehnert, 2024. "Intergenerational Mobility of Education in Europe: Geographical Patterns, Cohort-Linked Measures, and the Innovation Nexus," Economics of Education Working Paper Series 0211, University of Zurich, Department of Business Administration (IBW).
    4. Elodie Andrieu & John Morrow, 2024. "Can Firm Subsidies Spread Growth?," PSE Working Papers halshs-04721319, HAL.
    5. Andrieu, Elodie & Morrow, John, 2024. "Can firm subsidies spread growth?," LSE Research Online Documents on Economics 126775, London School of Economics and Political Science, LSE Library.
    6. J. Vernon Henderson & Francisco Libano-Monteiro & Martina Manara & Guy Michaels & Tanner Regan, 2025. "Economics of Greenfield Urban Planning," Working Papers 2025-007, The George Washington University, The Center for Economic Research.
    7. Pernagallo, Giuseppe, 2024. "The student funding dilemma," The Journal of Economic Asymmetries, Elsevier, vol. 30(C).
    8. Burchardi, Konrad & Terry, Stephen & Chaney, Thomas & Tarquinio, Lisa & Hassan, Tarek, 2020. "Immigration, Innovation, and Growth," CEPR Discussion Papers 14719, C.E.P.R. Discussion Papers.
    9. Carlos Esteban Posada, 2020. "Cambio técnico y política económica: la teoría y el caso colombiano (1950-2019)," Documentos de Trabajo de Valor Público 18506, Universidad EAFIT.
    10. Miklós Koren & Krisztina Orban, 2025. "Managers, Entrepreneurs, and the Allocation of Talent: Evidence from Hungary's Transition," CEU Working Papers 2025_2, Department of Economics, Central European University.
    11. Ufuk Akcigit & Nathan Goldschlag, 2023. "Where Have All the "Creative Talents" Gone? Employment Dynamics of US Inventors," NBER Working Papers 31085, National Bureau of Economic Research, Inc.
    12. Ufuk Akcigit & Nathan Goldschlag, 2025. "Measuring the characteristics and employment dynamics of U.S. inventors," Journal of Economic Growth, Springer, vol. 30(2), pages 237-269, June.
    13. Barbara Biasi & Song Ma, 2022. "The Education-Innovation Gap," CESifo Working Paper Series 9653, CESifo.
    14. Santiago Caicedo & Jeremy Pearce, 2024. "Need for Speed: Quality of Innovations and the Allocation of Inventors," Staff Reports 1127, Federal Reserve Bank of New York.
    15. Marchiori, Carmen & Minelli, Enrico, 2023. "Talent, basic research and growth," Journal of Economic Theory, Elsevier, vol. 213(C).
    16. Cao, Linyi & Jiang, Helu & Li, Guangwei & Zhu, Lijun, 2024. "Haste makes waste? Quantity-based subsidies under heterogeneous innovations," Journal of Monetary Economics, Elsevier, vol. 142(C).
    17. Xiao Ma, 2024. "College Expansion, Trade, And Innovation: Evidence From China," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(1), pages 315-351, February.
    18. Andrea Bonaccorsi & Laura Barin & Paola Belingheri & Federico Biagi & Mabel Sanchez-Barrioluengo, 2024. "Is higher education more important for firms than research? Disentangling university spillovers," The Journal of Technology Transfer, Springer, vol. 49(3), pages 900-925, June.
    19. Maddalena Honorati & Indhira Santos & Indhira Santos, 2024. "Investing in Skills to Accelerate Job Transitions," World Bank Publications - Reports 42103, The World Bank Group.

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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