Natural selection and innovation-driven growth

Chu, Angus and Cozzi, Guido and Fan, Haichao and Hu, Dongmin (2025): Natural selection and innovation-driven growth. Forthcoming in: Macroeconomic Dynamics

Abstract

This paper examines how the interaction between natural selection, household education choices and R&D activities influences macroeconomic growth. We develop an innovation-driven growth model that integrates household heterogeneity in educational ability with endogenous fertility and the activation of innovation. Our findings reveal that households with lower educational abilities accumulate less human capital but have more offspring and initially gain a temporary evolutionary advantage. This demographic shift enhances the likelihood of innovation taking off; however, the resulting reduction in the share of high-ability households ultimately constrains R&D efforts and slows long-term economic growth. We empirically validate our theoretical model using cross-country data and instrumental variables, demonstrating that disparities in educational ability negatively impact education, innovation and growth over the long run. This study provides new insights into the complex dynamics between natural selection, endogenous fertility and economic development, with significant implications for both policy and theory.

• 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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