@techreport{Grossmann2004promote,
abstract = {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.},
author = {Volker Grossmann},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {O31; H20; O41; O38; 330; education policy; endogenous growth; R&D subsidies; scientists and engineers; Hochschulfinanzierung; \"{O}ffentliche Bildungsausgaben; Forschungssubvention; Vergleich; Neue Wachstumstheorie; Bildungsverhalten; Theorie},
language = {eng},
number = {1225},
title = {How to promote R&D-based growth? : public education expenditure on scientists and engineers versus R&D subsidies},
type = {CESifo working papers},
url = {http://hdl.handle.net/10419/18864},
year = {2004}
}
