This paper develops a two-sector general-equilibrium model in which firms in the primary economy have to create workplaces prior to production and product-market competition. For this, we introduce the endogenous sunk-cost approach with two-stage decisions of firms from IO in the macro labor...

In this paper, it is illustrated in a simple balanced growth model with redistributive capital income taxation that it is generally misleading to attribute welfare significance to the preferences of a representative consumer, if lump sum redistribution is unfeasible. This result holds even if a...

Empirical evidence suggests that positive externalities from R&D exceed negative ones. According to conventional wisdom, this calls for R&D subsidies. This paper develops a quality-ladder growth model with overlapping generations which evaluates the positive and normative implications of R&D...

The theory of endogenous technical change has deeply contributed to our understanding of the fundamental sources of economic growth and development. In this chapter we survey important contributions in the field by focussing on the basic structure of endogenous growth models with horizontal as...

This paper develops a model in which the interaction of entrepreneurial investments and power of the owners of land or other natural resources determines structural change and economic development. A more equal distribution of natural resources promotes structural change and growth through two...

R&D-based growth theory suggests that a larger population size raises either the long-run rate of economic growth (“strong scale effect”) or the level of per capita income (“weak scale effect”), with far-reaching policy implications. However, for modern times there is little empirical...

Altruistic parents may transfer resources to their offspring by providing education, and by leaving bequests. We show that in the presence of wage taxation, a small bequest tax may improve efficiency in an overlapping-generations framework with only intended bequests, by enhancing incentives of...

This paper examines the role of religious denomination for human capital formation. We employ a unique data set which covers, inter alia, information on numerous measures of school inputs in 169 Swiss districts for the years 1871/72, 1881/82 and 1894/95, marks from pedagogical examinations of...