The R&D Based Endogenous Growth Model: R&D workers, Skill Premium and Productivity Growth∗

This paper attempts to explain the features of the recent U.S. economy by applying the transitional dynamics analysis of the R&D based endogenous growth model. It tries to explain the observed comovements of three variables: the relative wage rate of high skilled labour, the share of R&D workers and per capita output growth rate show a sharp decline in the ∗This paper is based upon the fourth chapter of my PhD thesis at the University of London. I am grateful to Reza Arabsheibani, Andrew Mountford and Michael Spagat for their helpful suggestions. I would also like to thank Gylfi Zoega and Jonathan Temple for his insightful comments. All remaining errors are mine. †Tel: +81-3-3593-5552; fax: +81-3-3593-4270; E-mail address: [email protected]