Twin Engines of Growth

Huw Lloyd-Ellis and Joanne Roberts ()

No 118, Cahiers de recherche CREFE / CREFE Working Papers from CREFE, Université du Québec à Montréal

Abstract: We develop an endogenous growth model in which new technology and new skills are bounded complements -- they complement each other to a point, but beyond this the impact of each factor is constrained by the level of the other. As a result, both technological progress and human capital accumulation are necessary for sustained productivity growth, but neither alone is sufficient. Rapid technological progress generates increased returns to education and encourages each generation to spend more time at school. Rapid human capital accumulation increases the feasability and profitability of innovation and encourages the private business sector to allocate more resources towards R&D. Our model has important implications for the effectiveness of alternative growth-promoting policies, for the interpretation of the empirical relationship between growth and schooling, and for the relationship between growth and intergenerational wage dispersion.

Nous développons un modèle de croissance endogène dans lequel la nouvelle technologie et les nouvelles compétences sont des compléments limités -- elles se complémentent jusqu'à un certain point, au delà duquel l'impact de chaque facteur est contraint par le niveau de l'autre. Alors, le progrès technologique et l'accumulation de capital humain sont nécessaires les deux pour une croissance soutenue de la productivité, mais aucun n'est suffisant seul. Un progrès technologique rapide génère des rendements croissants de l'éducation et encourage chaque génération à consacrer plus de temps à l'école. Une accumulation rapide de capital humain accroît la faisabilité et la profitabilité de l'innovation et encourage le secteur privé à allouer plus de ressources en recherche et développement. Notre modèle a des implications importantes pour la relation empirique entre croissance et éducation, et pour la relation entre croissance et dispersion intergénérationnelle des salaires.

Keywords: Endogenous technological change; endogenous human capital accumulation; minimum skill requirements; bounded complementarity (search for similar items in EconPapers)
JEL-codes: E0 O1 O4 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2000-06
New Economics Papers: this item is included in nep-dev, nep-dge, nep-edu, nep-ino and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Working Paper: Twin Engines of Growth (2000)
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