The impact of public goods and services and public R&D on the non-observed economy size, wages inequality and growth

Oscar Afonso

Economic Modelling, 2012, vol. 29, issue 5, 1996-2004

Abstract: We develop a general equilibrium endogenous growth model in which final goods can be produced either in the Non-Observed Economy (NOE) or in the Official Economy (OE). In particular, by solving transitional dynamics numerically towards the unique and stable steady state, we show that, by affecting the technological-knowledge bias in favour of the OE, productive public goods and services and public policies promoting R&D explain the simultaneous rise in the OE size, the wage premium in favour of OE workers and the economic growth rate. These results are mainly in line with empirical evidence for developed countries, since the 1990s.

Keywords: Public goods and services; Public R&D policies; Non-observed economy; Technological knowledge; Wages; Economic growth (search for similar items in EconPapers)
JEL-codes: C61 H50 J31 O17 O31 O47 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:29:y:2012:i:5:p:1996-2004

DOI: 10.1016/j.econmod.2012.06.003

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