Market Power, Human Capital and Growth

Abstract

In this paper we study the economic determinants of the inter-sectoral distribution of skilled workers and the long-run consequences of imperfect competition on growth within an R&D-based growth model with human capital accumulation. We find that steady-state growth is driven only by incentives to accumulate human capital and is independent of scale effects. In the model imperfect competition has a positive growth effect, while influencing the allocation of human capital to the diferent economic activities. Contrary to general wisdom, high R&D investment is not always associated with high output growth.Endogenous Growth;Human Capital;R&D