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The Role of R&D Factors in Economic Growth

Author

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  • Lorenz Ekerdt
Abstract
This paper studies factor usage in the R&D sector. I show that the usage of non-labor inputs in R&D is significant, and that their usage has grown much more rapidly than the R&D workforce. Using a standard growth decomposition applied to the aggregate idea production function, I estimate that at least 77% of idea growth since the early 1960s can be attributed to the growth of non-labor inputs in R&D. I demonstrate that a similar pattern would hold on the balanced growth path of a standard semi-endogenous growth model, and thus that the decomposition is not simply a by-product of rising research intensity. I then show that combining long-running differences in factor growth rates with non-unitary elasticities of substitution in idea production leads to a slowdown in idea growth whenever labor and capital are complementary. I conclude by estimating this elasticity of substitution and demonstrate that the results favor complimentarities.

Suggested Citation

  • Lorenz Ekerdt, 2024. "The Role of R&D Factors in Economic Growth," Working Papers 24-69, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:24-69
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    File URL: https://www2.census.gov/library/working-papers/2024/adrm/ces/CES-WP-24-69.pdf
    File Function: First version, 2024
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