This paper endogenizes technology and human capital formation in the MESEM model that was developed by van Sinderen (Economic Modelling, 1993, 13, 285-300). Tax allowances for private R&D expenditures and public expenditures on both education and R& D are effective instruments to stimulate economic growth. Simulations with respect to market clearing, the importance of supply-side elements and key parameters (such as the magnitude of spillovers and substitution elasticities) reveal that tax allowances for private R & D are the most robust instrument to increase economic growth through the accumulation of knowledge. Contrary to other studies that find that technology policies typically reduce employment, we find that overall employment rises.

Netherlands, human capital, macroeconomic regimes, research and development, technology policy, technology spillovers
Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation (jel E62), Government Expenditures and Education (jel H52), Human Capital; Skills; Occupational Choice; Labor Productivity (jel J24), Government Policy (jel O38)
ISS Staff Group 0
International Institute of Social Studies of Erasmus University (ISS)

van Bergeijk, P.A.G, van Hagen, G.H.A, de Mooij, R.A, & van Sinderen, J. (1996). Endogenizing technological progress: The MESEMET Model. ISS Staff Group 0. Retrieved from