Complementarity between heterogeneus human capital and R&D: can job-training avoid low development traps?

This paper uses a non-overlapping generations model of endogenous growth to describe the effect of human capital’s heterogeneity on economic growth. In the model, workers can accumulate human capital not only through education, but also through on-the-job training (j-t); enterpreneurs can invest in R&D and can offer training. We model two different typologies of training. The first, technology-general (T-GT), is offered even without R&D and to all workers; the second one, technologyspecific T-S T), is joined to the success of innovative activity and provided just to those workers engaged in research. The paper, by extending Redding (1996), demonstrates that human capital composition, which is often neglected in endogenous growth models, is important in determining the probability of innovation occurring and the economy’s rate of growth. In particular, it shows that complementarities between different types of human capital investment are important. Moreover, training causes a multiplicity of equilibria in education investment and rate of growth, and technology-general training avoids low development traps when R&D is absent.