Education, Innovation, and Long-Run Growth

ISER Discussion Paper No. 731

28 Pages Posted: 15 Feb 2009 Last revised: 15 Jan 2015

Katsuhiko Hori

Tezukayama University

Katsunori Yamada

Kindai University, Faculty of Economics; Osaka University - Institute of Social and Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: November 24, 2011

Abstract

This study augments a second-generation Schumpeterian growth model to employ human capital explicitly. We clarify the general-equilibrium interactions of subsidy policies to R&D and human capital accumulation in a unified framework. Despite a standard intuition that subsidizing these growth-enhancing activities is always mutually growth promoting, we find a symmetric effects for subsidieson R&D and those on education. Our theoretical result of asymmetric policy effects provides an important empirical caveat that empirical researchers may find false negative relationships between education subsidies and the output growth rate, if they merely rely on the standard human capital model.

Keywords: quality improvements, variety expansion, human capital, subsidies

JEL Classification: O15, O32, O41

Suggested Citation

Hori, Katsuhiko and Yamada, Katsunori, Education, Innovation, and Long-Run Growth (November 24, 2011). ISER Discussion Paper No. 731. Available at SSRN: https://ssrn.com/abstract=1344066 or http://dx.doi.org/10.2139/ssrn.1344066

Katsuhiko Hori (Contact Author)

Tezukayama University ( email )

7-1-1 Tezukayama
Nara, Nara 631-8501
Japan

Katsunori Yamada

Kindai University, Faculty of Economics ( email )

Higashi-Osaka City, Osaka 577-8502
Japan

HOME PAGE: http://www.eonet.ne.jp/~kyamada/

Osaka University - Institute of Social and Economic Research ( email )

6-1, Mihogaoka
Ibaraki, Osaka 567-0047
Japan

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