Discussion Papers no. 694

Innovative and absorptive capacity effects of education in a small open economy

Evidence points to relatively low supply elasticities for workers skilled for research and development (R&D), which can hamper innovation and growth. Increasing the supply of R&D skills will expand an economy's innovative capacity. A simultaneous effect of increased education, which is particularly important for small, open economies, is to raise final goods producers’ capacity to absorb cross-border knowledge spillovers. In a calibrated endogenous growth model for Norway, we find that increasing the share of highly educated workers has pronounced absorptive capacity effects that partially crowd out R&D-based innovation. Both innovative and absorptive capacity expansions contribute to higher growth and welfare.

Om publikasjonen

Tittel

Innovative and absorptive capacity effects of education in a small open economy

Ansvarlige

Brita Bye, Taran Fæhn

Serie og -nummer

Discussion Papers no. 694

Utgiver

Statistics Norway

Emne

Discussion Papers

ISSN

1892-753X

Antall sider

43

Målform

Engelsk

Om Discussion Papers

Discussion papers comprise research papers intended for international journals and books. A preprint of a Discussion Paper may be longer and more elaborate than a standard journal article as it may include intermediate calculations, background material etc.

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