We study a dynamic model where growth requires long-term investment, and productivity depends on managerial selection. When ability is not ex-ante observable, managerial selection imposes a cost, as managers facing the risk of being replaced tend to choose a sub-optimally low level of long-term...

We construct an endogenous growth model incorporating Nelson and Phelps' insight that human capital and technology are complementary. By assuming that new technologies can initially be operated by skilled labor only, we formalize the idea that the payoff to human capital is positive only if...