Abstract
The paper aims to study the co-evolution dynamics of human capital and innovative firms by means of an evolutionary game theory model. We analyze the properties of the model, showing that if the demand for skilled labor is higher than its supply, then innovative firms may have an incentive to become non-innovative and stop hiring skilled workers. If, by contrast, the supply of skilled labor is higher than its demand, then there could be incentives for non-innovative firms to become innovative. Then, we introduce the dynamic extension of the model, applying a replicator dynamics equation for the fraction of innovative firms and the fraction of skilled workers. The steady states of the system are identified and as the most interesting one, the interior steady state, is discussed. Subsequently some simplified versions of the model are proposed and studied. By means of such analysis, we claim that a policy oriented to increasing the stock of skilled labor can set the economy on a positive path towards technological development.
Laura Policardo: Opinions expressed in this publication are those of the authors and do not necessarily reflect the official opinion of the Italian Agenzia delle Dogane e dei Monopoli.
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Notes
- 1.
In the sophisticated context of firms’ evolutionary theory the idea of Nelson and Phelps (1966) is referred to, created in the macroeconomic sphere, that “internal” knowledge is needed to absorb new knowledge produced outside, showing a kind of inverse causal process between intellectual capital and innovation.
- 2.
- 3.
For a broad overview of the topic on nonlinear economic dynamics, see Matsumoto et al. (2018).
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Acknowledgements
We benefitted from discussions and comments from Costas Azariadis, Gian Italo Bischi, Sebastian Ille, Akio Matsumoto, Lionello F. Punzo, Ferenc Szidarovszky and Laura Veldkamp. We thank the anonymous reviewers for their constructive comments, which helped us to improve the manuscript. We would like to thank the Research Workgroup GEU at DESP-University of Urbino Carlo Bo, Italy. We would also like to thank the Research Workgroup on Seminario de Investigacion y Estudio en Teoria Economica at the Department of Mathematical Economics, University of San Luis Potosi, and SNI-CONACYT Mexico. This research work has been developed in the framework of the research project on “Models of behavioral economics for sustainable development” financed by DESP- University of Urbino Carlo Bo. The usual disclaimer applies.
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Sanchez Carrera, E.J., Policardo, L., García, A., Accinelli, E. (2020). A Co-evolutionary Model for Human Capital and Innovative Firms. In: Szidarovszky, F., Bischi, G. (eds) Games and Dynamics in Economics. Springer, Singapore. https://doi.org/10.1007/978-981-15-3623-6_2
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