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Innovation, Human Capital Destruction and Firms’ Investment in Training

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  • Maria Rosaria Carillo
  • Alberto Zazzaro

Abstract

We analyse the effect of human capital obsolescence due to the introduction of technological innovations on the long‐run growth rate, and show that in equilibrium the pace of technical change may be faster than is socially optimal. In such cases, the existence of market imperfections, and their costs for firms, may improve the welfare for the society as a whole. In particular, we assume that firms do not have full information on workers’ skills but can arrange some form of internal training that permits them to acquire the lacking information. Training costs reduce research and development investments by firms and in this way draw the market equilibrium closer to the social optimum.

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  • Maria Rosaria Carillo & Alberto Zazzaro, 2000. "Innovation, Human Capital Destruction and Firms’ Investment in Training," Manchester School, University of Manchester, vol. 68(3), pages 331-348, June.
    • Handle: RePEc:bla:manchs:v:68:y:2000:i:3:p:331-348
    DOI: 10.1111/1467-9957.00197
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    Cited by:

    1. Tiago Neves Sequeira, 2011. "On the effect of R&D in returns to experience," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(1), pages 25-37.
    2. Teresa Dieguez & Aurora A.C.Teixeira, 2008. "ICTs and Family Physicians Human Capital Upgrading.Delightful Chimera or Harsh Reality?," FEP Working Papers 275, Universidade do Porto, Faculdade de Economia do Porto.

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