The skill premium and economic growth with costly investment, complementarities and international trade of intermediate goods

Oscar Afonso, Pedro Cunha Neves and Maria Thompson

Japan and the World Economy, 2016, vol. 37-38, 73-86

Abstract: We analyse the behaviour of the skill premium and the growth rate in an innovator–imitator general equilibrium growth model with international trade of intermediate goods, internal costly investment in both physical capital and R&D, and complementarities between intermediate goods in production. We find that, as opposed to the growth rate, the skill premium is not affected by the complementarities degree nor the investment cost, in any of the countries. We also conclude that, in line with related empirical literature, openness to trade leads to an increase in the skill premium in both countries, while the sign of its impact on the growth rate depends on the magnitude of its counteracting determinants.

Keywords: Technological-knowledge bias; Skill premium; Growth rate; Complementarities; Costly investment; International trade (search for similar items in EconPapers)
JEL-codes: F43 J31 O31 O33 O41 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:japwor:v:37-38:y:2016:i::p:73-86

DOI: 10.1016/j.japwor.2016.04.002

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