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A NOTE ON SKILL-STRUCTURE SHOCKS, THE SHARE OF THE HIGH-TECH SECTOR, AND ECONOMIC GROWTH DYNAMICS

  • Pedro Mazeda Gil (a1), Oscar Afonso (a1) and Paulo B. Vasconcelos (a2)
Abstract

By means of an endogenous growth model of directed technical change with vertical and horizontal R&D, we study a transitional-dynamics mechanism that is consistent with the changes in the shares of the high- versus the low-tech sectors found in recent European data. Under the hypothesis of a positive shock in the proportion of high-skilled labor, the technological-knowledge bias channel leads to unbalanced sectoral growth with a noticeable shift of resources across sectors. A calibration exercise suggests that the model is able to account for up to from 50 to about 100 percent of the increase in the share of the high-tech sector observed in the data from 1995 to 2007. However, the model predicts that the dynamics of the share of the high-tech sector has no significant impact on the dynamics of the economic growth rate.

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Corresponding author
Address correspondence to: Pedro Mazeda Gil, Faculty of Economics and CEF.UP, University of Porto, Rua Dr Roberto Frias, 4200-464, Porto, Portugal; e-mail: pgil@fep.up.pt.
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This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

D. Acemoglu and F. Zilibotti (2001) Productivity differences. Quarterly Journal of Economics 116 (2), 563606.

O. Afonso and M. Thompson (2011) Costly investment, complementarities and the skill premium. Economic Modelling 28, 22542262.

T. Eicher and S. Turnovsky (2001) Transitional dynamics in a two-sector non-scale growth model. Journal of Economic Dynamics and Control 25, 85113.

P. Geroski (1995) What do we know about entry? International Journal of Industrial Organization 13, 421440.

R. Ngai and C. Pissarides (2007) Structural change in a multi-sector model of growth. American Economic Review 97 (1), 429443.

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Macroeconomic Dynamics
  • ISSN: 1365-1005
  • EISSN: 1469-8056
  • URL: /core/journals/macroeconomic-dynamics
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