Abstract
Endogenous growth models based on micro-foundations predict that total factor productivity (TFP) growth is positively associated with effective research effort. We use macroeconomic-pooled time-series–cross-sectional data for the G7 countries from 2000 to 2017 to provide a robust estimate of this positive effect of research effort on TFP growth.
Highlights
Several generations of endogenous and semi-endogenous growth models, which are based on micro-foundation at the firm level, e.g., Jones (2002), Jones and Kim (2018), and Bloom et al (2020), model total factor productivity (TFP) growth rate as a function of effective research effort.1 This relationship is a key mechanism to drive economic growth in such models
The increase in research effort by 1% increases TFP growth by more than 1%, and the increase in the number of researchers has been associated with declining TFP
TFP growth is proportional to the level of effective research effort
Summary
Several generations of endogenous and semi-endogenous growth models, which are based on micro-foundation at the firm level, e.g., Jones (2002), Jones and Kim (2018), and Bloom et al (2020), model total factor productivity (TFP) growth rate as a function of effective research effort. This relationship is a key mechanism to drive economic growth in such models. Several generations of endogenous and semi-endogenous growth models, which are based on micro-foundation at the firm level, e.g., Jones (2002), Jones and Kim (2018), and Bloom et al (2020), model total factor productivity (TFP) growth rate as a function of effective research effort.. Several generations of endogenous and semi-endogenous growth models, which are based on micro-foundation at the firm level, e.g., Jones (2002), Jones and Kim (2018), and Bloom et al (2020), model total factor productivity (TFP) growth rate as a function of effective research effort.1 This relationship is a key mechanism to drive economic growth in such models. The time individuals use to attend schools or engage in training programs is the time spent out of the labor market When they are training to acquire human capital they are not involved
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