What role for human capital in the growth process: new evidence from endogenous latent factor panel quantile regressions

The estimates for the human capital effect in cross-country growth regressions have been subject of considerable controversy. We argue that human capital is intrinsically a multidimensional construct. We construct human capital measure by combining available alternative proxies via confirmatory factor analysis. Using panel data endogenous quantile regression methods we analyse the whole conditional growth distribution by simultaneously accounting for the potential endogeneity of human capital and country specific effects. Our results conform to theoretical expectations and we are able to demonstrate the beneficial effect of both the measurement approach and the endogeneity correction on the derivation of theoretically consistent estimates

Quantifying sunk costs and learning effects in R&D persistence

This paper analyzes and quantifies the fundamental factors that are likely to cause persistence in performing R&D activities: the existence of sunk costs associated with R&D activities and the process of learning that characterizes this type of activity. We estimate our model with Spanish manufacturing firms for the period 1991-2014. By decomposing the effects of sunk costs and learning effects, we find that both are important determinants of R&D persistence, and that failing to allow for learning systematically overestimates sunk cost effects. Both large firms and SMEs benefit from direct and indirect (via productivity) effects of R&D experience, but in large firms this is more likely to be manifest through productivity improvements while in smaller firms the effect is more skewed towards a direct effect on R&D likelihood. Further, our results suggest that whereas the impact of sunk costs in R&D persistence is greater for large firms than for SMEs, the scope for direct learning from continuous R&D engagement is greater for SMEs than for larger firms