We develop a model of induced innovation that applies to medical research. Our model yields three empirical predictions. First, initial death rates and subsequent research effort should be positively correlated. Second, research effort should be associated with more rapid mortality declines. Third, as a byproduct of targeting the most common…

Results of a Bureau of Labor Statistics study suggest that the direct contribution of research and development to postwar productivity growth was between 0.1 and 0.2 percent annually in the nonfarm business sector; research and development had no substantial effect on the post-1973 productivity slowdown. (Author)