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Natural Selection and Innovation-Driven Growth

Chu, Angus and Cozzi, Guido and Fan, Haichao (2022): Natural Selection and Innovation-Driven Growth.

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How does the interplay between natural selection, household education choices, and R&D activities shape our macroeconomic trajectory? Delving deep into this question, we present a novel innovation-driven growth model that intricately connects household heterogeneity in education ability with fertility and R&D-driven technological progress. Our findings unravel a captivating paradox: while households with lower education abilities might amass less human capital and choose to have more offspring, they gain a fleeting evolutionary advantage. This advantage, however, exacts a significant toll, stifling R&D and curtailing long-term economic growth. Our model not only theoretically reveals this complex dynamic but validates it with cross-country data and an instrumental variable, suggesting that education disparities can hamper R&D output, education outcomes, and economic expansion in the long run. This research unveils crucial insights into the nuanced relationships between natural selection, household education choices, and R&D.

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