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A NOTE ON SKILL-STRUCTURE SHOCKS, THE SHARE OF THE HIGH-TECH SECTOR, AND ECONOMIC GROWTH DYNAMICS

Published online by Cambridge University Press:  13 April 2016

Pedro Mazeda Gil ,
Oscar Afonso  and
Paulo B. Vasconcelos
Pedro Mazeda Gil*
Affiliation:
University of Porto and CEF.UP
Oscar Afonso
Affiliation:
University of Porto and CEF.UP
Paulo B. Vasconcelos
Affiliation:
University of Porto and CMUP
*
Address correspondence to: Pedro Mazeda Gil, Faculty of Economics and CEF.UP, University of Porto, Rua Dr Roberto Frias, 4200-464, Porto, Portugal; e-mail: pgil@fep.up.pt.
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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.

Keywords

Industry DynamicsHigh TechLow TechDirected Technical ChangeEconomic Growth
Type
Notes
Information
Macroeconomic Dynamics , Volume 20 , Issue 7 , October 2016 , pp. 1906 - 1923
Copyright
Copyright © Cambridge University Press 2016 

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