Biomedical Researchers, Economic Growth and the Harmful Effects of Student Loan Debt

Modern theories of economic growth emphasize the role of technological progress in determining a society’s standard of living. Progresses in the technological frontier are ultimately driven by new ideas, generated within the research and development (R&D) activities. In some advanced economies, however, higher education costs and the level of indebtedness among graduates have increased dramatically during recent years. This phenomenon is particularly evident in the United States, and within the biomedical science students. In this paper, we develop a basic model of economic growth in order to investigate the effects of biomedical graduates indebtedness on the allocation of human resources in the R&D activities, and thus on the long run growth process. We derive a ‘science-growth curve’ (a relation between the share of pure re-searcher and the economy rate of growth), and we find two possible effects of student indebtedness on eco-nomic growth: specifically, a composition effect and a productivity effect.