On the effects of human capital and R&D policies in an endogenous growth model

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Abstract

We introduce an external effect of existing technologies in human capital accumulation in an endogenous growth model and describe its steady-state and transition. We numerically solve the model to compare the quantitative effects of R&D policy with the quantitative effects of human capital policy in wealth and welfare. Although R&D subsidies have now an overall positive effect on growth, wealth and welfare, the calibration exercise shows that for plausible values for the parameters, human capital policy is simultaneously the most income and welfare-improving and the less expensive to the government.
Original languageEnglish
Pages (from-to)968-982
JournalEconomic Modelling
Volume25
Issue number5
DOIs
Publication statusPublished - 1 Jan 2008

Keywords

  • human capital
  • R&D
  • endogenous growth
  • welfare

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