Twin Engines of Growth: Skills and Technology as Equal Partners in Balanced Growth

Huw Lloyd-Ellis and Joanne Roberts ()

Journal of Economic Growth, 2002, vol. 7, issue 2, 87-115

Abstract: We develop an endogenous growth model in which skill acquisition by households and innovation by firms make distinct contributions to productivity growth. Nevertheless, the incentives faced by firms and households are inextricably linked because skills are required to implement new technologies. Skills and technologies are dynamic complements but, because their production complementarity is inherently bounded, they are "equal partners" in driving growth: neither can generate sustained growth alone. Our model has important implications for the effectiveness of alternative growth-promoting policies, for interpreting the empirical relationship between growth and schooling, and the relationship between growth and intergenerational wage dispersion. Copyright 2002 by Kluwer Academic Publishers

Date: 2002
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