Economic Growth and the High Skilled: the Role of Scale Effects and of Barriers to Entry into the High Tech

Pedro Gil, Oscar Afonso and Paulo Brito ()

No 55, GEE Papers from Gabinete de Estratégia e Estudos, Ministério da Economia

Abstract: Empirical evidence on the relationship between economic growth, the technology structure and the skill structure seems to be inconsistent: the weak relationship between economic growth and the skill structure is conventionally interpreted as pointing to the non-existence of scale elects, while the technology structure-skill structure relationship indicates that there are. We show that there is no inconsistency between the two facts, if we consider a further dynamic effect associated to directed technical change: the existence of differential barriers to entry in high-tech and low-tech sectors. To prove this, we extend a benchmark directed technical change model by incorporating both horizontal and vertical R&D and estimate and calibrate it with cross-country European data. This framework allows us to derive interesting policy implications, namely that the effects of education policy on economic growth may be electively leveraged by industrial policy aiming to reduce barriers to entry into the high-tech sectors.

Keywords: growth; high skilled; high tech; scale eects; directed technical change. (search for similar items in EconPapers)
JEL-codes: O31 O41 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2014-09, Revised 2014-09
New Economics Papers: this item is included in nep-fdg and nep-gro
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https://www.gee.gov.pt/RePEc/WorkingPapers/GEE_PAPERS_55.pdf First version, 2014 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:mde:wpaper:0055

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