A Note on Skill-Structure Shocks, the Share of the High-Tech Sector, and Economic Growth Dynamics

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.

How Powerful Are Trade Unions? A Skill-Biased Technological Change Approach

“…Finally, we try to fill the gap between the existent standard SBTC framework and the labor market models by combining both approaches into a generic benchmark model. In particular, as a departing point from the SBTC models, we follow Gil et al (2013Gil et al ( , 2016, Acemoglu (2003), and Aghion and Howitt (1992); and from the labor market framework Dunlop (1944), Ross (1948), and McDonald and Solow (1981).…”

“…The model presented herein is based on Acemoglu and Zilibotti (2001) and Gil et al (2013Gil et al ( , 2016. We consider a closed economy, where a single competitively produced final good, Y , can be used in R&D, R, production of intermediate goods, X, and consumed, C, as Y (t) = R(t) + X(t) + C(t).…”

“…Firms. Following the contributions of Gil et al (2013Gil et al ( , 2016, Acemoglu (2015), Acemoglu and Zilibotti (2001), and Wälde (2000), firms are indexed by n over the range [0,1]. There are two substitute production technologies: a high(low)-technology that uses a combination of high(low)-specific quality adjusted intermediate goods indexed by j H ∈ [J, 1] (j L ∈ [0, J ]) and high(low)skilled labor.…”

“…Following Gil et al (2013Gil et al ( , 2016, R&D firms invest their resources in vertical R&D, targeting qualitative improvements of already existing intermediate-goods varieties. A patent is granted to each new design, and a successful innovator gets exclusive rights over the use of his product.…”

“…Following Gil et al (2013Gil et al ( , 2016 and Connolly (2003), let pb m (k m , j m ) denote the Poisson arrival rate of vertical innovations in industry j m when the highest quality is k m . This rate changes across firms, across industries, and over time, which can be described as follows:…”