We consider a model of innovation that distinguishes between ideas and innovations. While innovation responds to incentives, ideas are a scarce resource that provide an exogenous constraint on the rate of innovation. We investigate how the optimal reward structure is shaped by the scarcity of...

This paper theoretically and empirically analyzes the interaction of emigration of highly skilled labor, an economy's income gap to potential host economies of expatriates, and optimal public infrastructure investment. In a model with endogenous education and R&D investment decisions we show...