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Wage Fairness, Growth and the Utilization of R&D Workers

Per Lundborg

No 206, Working Paper Series from Trade Union Institute for Economic Research

Abstract: In 1999, only one of three US scientists and engineers was employed to do R&D and, in several countries over the last forty to fifty years, employment of skilled workers for R&D purposes appears not to have kept pace with the overall increase in the supply of skilled workers. Low utilization of R&D personnel implies low growth per human capital endowments. To analyze the low R&D utilization/low growth equilibria, we set up an endogenous growth model in which firms set fair wages and which allows for an analysis of changes in the utilization rate of R&D workers. We find that the rise in under utilization and the fall in growth per human capital to be consistent with the increase in the demand for higher education. This could be interpreted as the “consumption” element in higher education has received an increased importance yielding a low growth effect of higher education. The results also point at problems of correctly measuring actual human capital inputs in firms.

Keywords: Efficiency wages; fairness; growth (search for similar items in EconPapers)
JEL-codes: J31 J41 O40 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2005-09-19
New Economics Papers: this item is included in nep-edu, nep-ino and nep-lab
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