ABSTRACT
The endogenous growth framework has become a useful tool to evaluate the long-run growth consequences of public policy since the pivotal work by Romer (1986) and Lucas (1988). There are substantial informational and institutional barriers to labour search, recruiting and job creation. This paper integrates an endogenous growth model into a labour search model a la Mortensen (1982) and Pissarides (1984), and uses the model to evaluate the effectiveness of some forms of human capital-related policies. We emphasize that labour market frictions can have long-run growth and welfare implications.
