Scale effects in endogenous growth theory : an error of aggregation not specification

  title={Scale effects in endogenous growth theory : an error of aggregation not specification},
  author={Christopher A. Laincz and Pietro F. Peretto},
Modern Schumpeterian growth theory focuses on the product line as the main locus of innovation and exploits endogenous product proliferation to sterilize the scale effect. The empirical core of this theory consists of two claims: (i) growth depends on average employment (i.e., employment per product line); (ii) average employment is scale invariant. We show that data on employment, R&D personnel, and the number of establishments in the US for the period 1964–2001 provide strong support for… CONTINUE READING
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