Human Capital Composition, R&D and the Increasing Role of Services

FEUNL Working Paper No. 456

50 Pages Posted: 16 Feb 2006

See all articles by Ana Balcão Reis

Ana Balcão Reis

New University of Lisbon - Faculdade de Economia

Tiago Neves Sequeira

University of the Interior of Beira - Faculty of Social Sciences and Humanities; New University of Lisbon - Faculdade de Economia

Date Written: 2004

Abstract

A growth model with endogenous innovation and accumulation of high-tech and low-tech human capital is developed. The model accounts for a recently established fact about human capital composition, which stated that the richest countries are investing proportionally less than middle income countries in engineering and technical human capital, due to the consideration of a negative effect of technological development on the accumulation of high-tech human capital. Under this new and reasonable assumption, our model also accounts for other previously established stylized facts. Both the evolution of human capital composition and the transition across stages of development are endogenously determined. We relate an increasing R&D activity and a negative relationship between income and the ratio of high to low-tech human capital, both present in developed countries, to the transition to a services economy. Although all growth rates are optimal, we observe under-allocation of high-tech human capital to industry.

Keywords: human capital composition, high-tech human capital, R&D, Development, structural transition

JEL Classification: O11, O14, O15, O31, O33

Suggested Citation

Reis, Ana Balcao and Neves Sequeira, Tiago, Human Capital Composition, R&D and the Increasing Role of Services (2004). FEUNL Working Paper No. 456, Available at SSRN: https://ssrn.com/abstract=882447 or http://dx.doi.org/10.2139/ssrn.882447

Ana Balcao Reis (Contact Author)

New University of Lisbon - Faculdade de Economia ( email )

Campus de Campolide
Lisboa, 1099-032
Portugal

Tiago Neves Sequeira

University of the Interior of Beira - Faculty of Social Sciences and Humanities ( email )

6200-209 Covilha
Portugal

New University of Lisbon - Faculdade de Economia ( email )

Campus de Campolide
Lisboa, 1099-032
Portugal

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