Innovation, Unemployment and Policy in the Theories of Growth and Distribution

Innovation, Unemployment and Policy in the Theories of Growth and Distribution

Edited by Neri Salvadori and Renato Balducci

Innovation, Unemployment and Policy in the Theories of Growth and Distribution increases our understanding about the more relevant economic determinants and policy aspects of the interdependence between economic growth and income distribution.

Chapter 1: Human capital, product market power and economic growth

Alberto Bucci

Subjects: economics and finance, economic psychology, history of economic thought, radical and feminist economics


* Alberto Bucci 1.1. INTRODUCTION Although an important theoretical research line of the research and development (R&D)-based growth literature has already investigated whether or not the presence of imperfect competition in the product market may be growth-enhancing (we discuss this literature more fully later on in this section), such an analysis has not yet been conducted within an integrated economic growth model where agents (firms and individuals) may decide to invest respectively in innovation and education activities and the growth engine is investment in human capital. This chapter aims to combine in the simplest possible way the basic Lucas (1988) model of human capital accumulation with (a version of) the Grossman and Helpman model of endogenous technical change without knowledge spillovers (1991, Ch. 3, pp. 43–57) in order to fill this significant gap in the literature. The reason why we focus on the version of the Grossman and Helpman model without knowledge spillovers is that we are interested in studying the link between product market competition and economic growth within an economy where the lever to economic development is investment in formal education, and not R&D activity. Apart from introducing explicitly human capital accumulation à la Lucas, the structure of our model economy is similar to that of the basic Grossman and Helpman approach (1991, Ch. 3). In more detail, we assume that there exist three vertically integrated sectors. A competitive final output sector produces a homogeneous consumer good. Depending on the value of a crucial parameter (the...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information