Working Paper Series, FIEF - Trade Union Institute for Economic Research
Wage Fairness, Growth and the Utilization of R&D Workers
Abstract: In 1999, only one of three US scientists and engineers was
employed to do R&D and, in several countries over the last forty to fifty
years, employment of skilled workers for R&D purposes appears not to have
kept pace with the overall increase in the supply of skilled workers. Low
utilization of R&D personnel implies low growth per human capital
endowments. To analyze the low R&D utilization/low growth equilibria, we
set up an endogenous growth model in which firms set fair wages and which
allows for an analysis of changes in the utilization rate of R&D workers.
We find that the rise in under utilization and the fall in growth per human
capital to be consistent with the increase in the demand for higher
education. This could be interpreted as the “consumption” element in higher
education has received an increased importance yielding a low growth effect
of higher education. The results also point at problems of correctly
measuring actual human capital inputs in firms.
Keywords: Efficiency wages; fairness; growth; (follow links to similar papers)
JEL-Codes: J31; J41; O40; (follow links to similar papers)
22 pages, September 19, 2005
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