Per Lundborg: Trade Union Institute for Economic Research, Postal: FIEF, Wallingatan 38, SE-111 24 Stockholm, Sweden
Abstract: We present a growth model in which the work morale of R&D workers is endogenously determined by fair wage considerations and show that increases in endowments of researchers do not necessarily have positive growth effects. The results is in line with the empirical observations that the very large increases in the number of R&D workers during the last 30 years have not generated the growth rates predicted by the basic endogenous growth models. Moreover, a number of mechanisms are present in the model that counteract the positive growth effects of higher education and which do not show up in growth models based on competitive wage setting.
25 pages, July 25, 1999
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