Human Capital and Innovation : A Model of Endogenous Growth With a 'Skill-Loss Effect'

The present paper argues that, in line with Nelson-Phelps (1966), there exist important complementarities among educational attainment, Ramp;D activities (and their derived innovations) and economic growth, although subject to a quot;skill-loss effectquot; (delta;-effect), due to the presence of workers who have to perform jobs that require other capacities than the ones they have. Taking Redding's (1996) formal framework, the main result of our model suggests that the more distorted the labour market is, the stronger must be the investment in Ramp;D necessary to attain a positive economic growth rate