Entrepreneurship is historically associated with risk bearing. Consequently, risk attitude is widely believed to affect the selection of individuals into entrepreneurial positions. The data support the supposedly negative effect of risk aversion on entrepreneurship selection. However, we do not feel enough confident about our measure of risk attitude to conclude anything concerning the causality of this relationship.
Research and development (R&D) is a key determinant of long run productivity and welfare. A central issue is whether a decentralized economy undertakes too little or too much R&D. We develop an endogenous growth model that incorporates parametrically four important distortions to R&D: the surplus appropriability problem, knowledge spillovers, creative destruction, and congestion externalities. We show that our model is consistent with the available evidence on R&D, growth, and markups. Calibrating the model to micro and macro data, we find that the decentralized economy typically underinvests in R&D relative to what is socially optimal. The only exceptions to this conclusion occur when both the congestion externality is extremely strong and the equilibrium real interest rate is very high. These results are robust to reasonable variations in model parameters.
At least since 1950, the U.S.economy has benefited from increases in both educational attainment and research intensity. Such changes suggest, contrary to the conventional view, that the U.S.economy is far from its steady-state balanced growth path. This paper develops a model in which these facts are reconciled with the stability of av- erage U.S. growth rates over the last century. In the model, long-run growth is driven by the worldwide discovery of new ideas, which in turn is tied to world population growth. Nevertheless, a constant growth path can temporarily be maintained at a rate greater than the long- run rate provided research intensity and educational attainment rise steadily over time. Growth accounting with this model reveals that 30 percent of U.S. growth between 1950 and 1993 is attributable to the rise in educational attainment, 50 percent is attributable to the rise in worldwide research intensity, and only about 10 to 15percent is due to the long-run component of growth related to the increase in world population.
This paper presents a simple model of human capital, ideas, and economic growth that integrates contributions from several different strands of the growth literature. The model generates a regression specification that is very similar to that employed by Mankiw, Romer, and Weil (1992), but the economics underlying the specification is very different. In particular, the model emphasizes the importance of ideas and technology transfer in addition to capital accumulation. The model suggests that cross-country data on educational attainment is most appropriately interpreted from the macro standpoint as something like an investment rate rather than as a capital stock. Finally, this setup helps to resolve a puzzle recently highlighted by the empirical growth literature concerning human capital and economic growth by following Bils and Klenow (1996) in emphasizing a relationship between wages and educational attainment that is consistent with Mincerian wage regressions.
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