Innovation, Human Capital Destruction and Firms' Investment in Training

The Manchester School, Vol. 68, Issue 3, June 2000

Posted: 13 Jul 2001

See all articles by Maria Rosaria Carillo

Maria Rosaria Carillo

University of Naples Parthenope - Department of Economic Studies (DES)

Alberto Zazzaro

Polytechnic University of Marche - Faculty of Economics

Abstract

We analyze 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.

Suggested Citation

Carillo, Maria Rosaria and Zazzaro, Alberto, Innovation, Human Capital Destruction and Firms' Investment in Training. The Manchester School, Vol. 68, Issue 3, June 2000, Available at SSRN: https://ssrn.com/abstract=242849

Maria Rosaria Carillo (Contact Author)

University of Naples Parthenope - Department of Economic Studies (DES) ( email )

via Medina 40
Naples, 80133
Italy

Alberto Zazzaro

Polytechnic University of Marche - Faculty of Economics ( email )

Piazzale Martelli, 8
60121 Ancona
Italy

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