Unemployment, Growth, and Complementarities between Innovation and Knowledge Diffusion

Pascal Hetze

No 32, Thuenen-Series of Applied Economic Theory from University of Rostock, Institute of Economics, Germany

Abstract: This paper analyzes the relationship between endogenous growth and unemployment. It provides knowledge diffusion as the link between innovation-based growth through creative destruction and the labor market outcome. Three dimensions of knowledge are considered: human capital (general skills), know-how gained through learning-byusing, and codified knowledge accumulated by research activities. Output growth is driven by innovations. However, the implementation of technological progress into a vintage-type production process requires the know-how that is only acquirable by the diffusion of knowledge through learning-by-using. A mutual feedback between research and the employment level thus arises, based on the complementary relationship between the input of labor in R&D and manufacturing. Inadequate knowledge diffusion causes limited growth and mismatch unemployment.

Keywords: mismatch unemployment; innovation-based growth; knowledge diffusion (search for similar items in EconPapers)
JEL-codes: E24 J63 O33 (search for similar items in EconPapers)
Date: 2002
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