Skill-Structure Shocks, the Share of the High-Tech Sector and Economic Growth Dynamics

By means of an endogenous growth model of directed technical change with vertical and horizontal R&D, we study a transitional-dynamics mechanism that is consistent with the changes in the share of the high- versus the low-tech sectors found in recent European data. Under the hypothesis of a positive shock in the proportion of high-skilled labour, the technological-knowledge bias channel leads to nonbalanced sectoral growth with a noticeable shift of resources across sectors. A simple calibration exercise suggests that, under prevailing market-scale effects, the model is able to account for up to 50 to 100 percent of the increase in the share of the high-tech sector observed in the data from 1995 to 2007. However, the model predicts that the dynamics of the share of the high-tech sector has no significant impact on the economic growth rate.