The low-skill, low-quality trap: Strategic complementarities between human capital and R & D

Research output: Contribution to journalArticlepeer-review

209 Scopus citations

Abstract

This paper investigates the relationship between investments in human capital and R & D in a model of endogenous growth. Both forms of investment exhibit pecuniary externalities and are, as a result, strategic complements. Multiple equilibria may occur for intermediate parameter values, and the present analysis may be seen as providing a theoretical rationalisation for the idea that an economy may become trapped in a 'low-skills' equilibrium, characterised by a poorly trained workforce and low product quality. In the presence of multiple equilibria, there may be a welfare-improving role for government policy in co-ordinating expectations.

Original languageEnglish (US)
Pages (from-to)458-470
Number of pages13
JournalEconomic Journal
Volume106
Issue number435
DOIs
StatePublished - Mar 1996

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Fingerprint

Dive into the research topics of 'The low-skill, low-quality trap: Strategic complementarities between human capital and R & D'. Together they form a unique fingerprint.

Cite this