Human Capital and Innovations

The project explores the interaction between human capital and innovations in the process of economic growth, using a model with endogenous economic growth. The focus of our analysis is on the incentives to acquire human capital and how they are affected by taxes on human capital and other policy instruments. In contrast to many other growth models, we find that the taxation of human capital has a substantial negative effect on the accumulation of it. This in turn lowers the income growth rate.