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

Arbeitspapier

Empirical evidence suggests that positive externalities from R&D exceed negative ones. According to conventional wisdom, this calls for R&D subsidies. This paper develops a quality-ladder growth model with overlapping generations which evaluates the positive and normative implications of R&D subsidies and compares them with the effects of public education policy to promote R&D. Unlike standard growth models, the proposed framework accounts for the specificity of science and engineering (S&E) skills, where individuals endogenously choose the type of education, and allows for heterogeneity in individual ability. Although intertemporal knowledge spillovers are hypothesized and negative R&D externalities are absent, the analysis shows somewhat surprisingly that R&D subsidies may be detrimental to both productivity growth and welfare, in contrast to publicly provided education targeted to S&E skills. Finally, the optimal structure of public education spending on different skills is examined.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 1225

Classification and Topics

• Classification: Wirtschaft ; Innovation and Invention: Processes and Incentives ; Taxation, Subsidies, and Revenue: General ; One, Two, and Multisector Growth Models ; Technological Change: Government Policy
• Subject: education policy ; endogenous growth ; R&D subsidies ; scientists and engineers ; Hochschulfinanzierung ; Öffentliche Bildungsausgaben ; Forschungssubvention ; Vergleich ; Neue Wachstumstheorie ; Bildungsverhalten ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Grossmann, Volker
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/18864
• Last update: 10.03.2025, 11:44 AM CET