Natural selection and innovation-driven growth

Chu, Angus and Cozzi, Guido and Fan, Haichao and Hu, Dongmin (2022): Natural selection and innovation-driven growth.

Abstract

How does the interplay between natural selection, household education choices, and R&D activities shape our macroeconomic trajectory? To explore this question, we develop an innovation-driven growth model that connects household heterogeneity in education ability with endogenous fertility and endogenous takeoff. Because households with lower education abilities accumulate less human capital and choose to have more offspring, they gain a temporary evolutionary advantage over households with higher education abilities, which in turn has novel implications on innovation-driven growth. Initially, the heterogeneity of households makes it more likely for an endogenous takeoff to occur; however, the temporary evolutionary disadvantage of high-ability households stifles R&D and long-run growth. We also validate this theoretical result with cross-country data and instrumental variables, suggesting that education ability disparities can hamper R&D, education, and economic growth in the long run. This research unveils useful insights into the nuanced relationships between natural selection, household education choices, and innovation.

• Item Type: MPRA Paper
• Language: English
• Keywords: natural selection; innovation; economic development
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity

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