How to promote R&D-based growth? Public education expenditure on scientists and engineers versus R&D subsidies

Grossmann, Volker

doi:10.1016/j.jmacro.2006.01.001

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Journal article

How to promote R&D-based growth? Public education expenditure on scientists and engineers versus R&D subsidies

BP2-STS

Grossmann, Volker ORCID University of Fribourg

2007

Published in:

Journal of Macroeconomics. - Elsevier BV. - 2007, vol. 29, no. 4, p. 891-911

English This paper compares the positive and normative implications of two alternative measures to promote R&D-based growth: R&D subsidies to firms and publicly provided education targeted to the development of science and engineering (S&E) skills. The model accounts for the specificity of S&E skills, where individuals with heterogeneous ability choose their type of education. Although intertemporal knowledge spillovers are the only R&D externality, the analysis suggests that R&D subsidies may be detrimental to both productivity growth and welfare. Moreover, they raise earnings inequality. In contrast to R&D subsidies, publicly provided education targeted to S&E skills are found to be unambiguously growth-promoting and neutral with respect to the earnings distribution.

Faculty

Faculté des sciences économiques et sociales et du management

Department

Département d'économie politique

Language