Twin Engines of Growth

Huw Lloyd-Ellis and Joanne Roberts ()

Working Papers from University of Toronto, Department of Economics

Abstract: We develop an endogenous growth model in which new technology and new skills are bounded complements they complement each other up 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 in school. Rapid human capital accumulation increases the feasibility 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. Keywords: Endogenous technological change, endogenous human capital accumulation, minimum skill requirements, bounded complementarity.

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: 51 pages
Date: 2000-06-11
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Citations: View citations in EconPapers (5)

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Working Paper: Twin Engines of Growth (2000)
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