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

Redding, Stephen (1996) The low-skill, low-quality trap: strategic complementarities between human capital and R & D. Economic Journal, 106 (435). pp. 458-470. ISSN 0013-0133

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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.

Item Type: Article
Official URL: http://www.blackwell-synergy.com/loi/ecoj
Additional Information: © 1996 Royal Economic Society
Library of Congress subject classification: H Social Sciences > HB Economic Theory
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Economics
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 04 Apr 2008 10:37
URL: http://eprints.lse.ac.uk/4106/

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