Education, Innovation, And Long-Run Growth

This paper combines three prototype endogenous growth models, the models with human capital accumulation introduced by Uzawa [1965] and Lucas [1988], variety expansion by Romer [1990], and quality improvements by Aghion and Howitt [1992], in order to investigate how these three engines of growth interact. The authors show that a subsidy to human capital accumulation has a positive impact on R&D effort, as well as on human capital accumulation. On the other hand, a subsidy to R&D sectors does not affect human capital accumulation in the model.