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Changing demand for general skills, technological uncertainty, and economic growth

Masashi Tanaka ()
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Masashi Tanaka: Graduate School of Economics, Osaka University

No 18-02, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: We develop a simple endogenous growth model featuring individuals f choices between general and firm-specific skills, endogenous technological innovation, and a government subsidy for education. General skills are less productive than are specific skills, but they enable workers to operate all technologies in the economy. We show that demand for general skills increases as countries catch up to the world technology frontier. Further, using aggregated data for 12 European OECD counties, we calibrate the model and compare the theoretical prediction with the data. In cross-country comparisons, we find that the returns on general skills and the impact of general education expenditure on GDP are higher in countries with higher total factor productivity. These findings support our theoretical argument of the positive relationship between firms f demand for general skills and countries f stages of development.

Keywords: General and specific skills; Technological uncertainty; Education policy; Distance to world technology frontier (search for similar items in EconPapers)
JEL-codes: J24 O33 O40 I22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-edu, nep-eff, nep-gro, nep-ino, nep-lma and nep-tid
Date: 2018-01
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