Tapping into Talent: Coupling Education and Innovation Policies for Economic Growth

Ufuk Akcigit, Jeremy Pearce and Marta Prato

No 2020-137, Working Papers from Becker Friedman Institute for Research In Economics

Abstract: How do innovation and education policy affect individual career choice and aggregate productivity? This paper analyzes the various layers that connect R&D subsidies and higher education policy to productivity growth. We put the development of scarce talent and career choice at the center of a new endogenous growth framework with individual-level heterogeneity in talent, frictions, and preferences. We link the model to micro-level data from Denmark and uncover a host of facts about the links between talent, higher education, and innovation. We use these facts to calibrate the model and study counter-factual policy exercises. We find that R&D subsidies, while less effective than standard models, can be strengthened when combined with higher education policy that alleviates financial frictions for talented youth. Education and innovation policies not only alleviate different frictions, but also impact innovation at different time horizons. Education policy is also more effective in societies with high income inequality.

Keywords: R&D policy; education policy; inequality; innovation; iq; endogenous growth (search for similar items in EconPapers)
JEL-codes: J24 O31 O38 O47 (search for similar items in EconPapers)
Pages: 67 pages
Date: 2020
New Economics Papers: this item is included in nep-fdg, nep-gro, nep-ino and nep-tid
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Citations: View citations in EconPapers (15)

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https://repec.bfi.uchicago.edu/RePEc/pdfs/BFI_WP_2020137.pdf (application/pdf)

Related works:
Working Paper: Tapping into Talent: Coupling Education and Innovation Policies for Economic Growth (2020)
Working Paper: Tapping into Talent: Coupling Education and Innovation Policies for Economic Growth (2020)
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