Decreasing Returns, Learning by Doing and Growth of Economists: Theory and Evidences

Abstract

We define an endogenous growth model underlying the rising incidence of scientific collaboration among economists where the positive externality in economic research production is the engine for growth. We show that sustained growth can be realized even if both production and knowledge accumulation exhibit strong decreasing return. Testing the theory with individual level data, we find evidences toward decreasing return and a strong learning by doing effect in economic research production, where the knowledge storage depends strongly on the immediate history of outputs. We discovered that the knowledge spillover effect accounts for at least 50% growth in outputs for our sample economists.