Abstract
We introduce firm and worker heterogeneity into a model of innovation-driven endogenous growth. Individuals who differ in ability sort into either a research activity or a manufacturing sector. Research projects generate new varieties of a differentiated product. Projects differ in quality and the resulting technologies differ in productivity. In both sectors, there is a complementarity between firm quality and worker ability. We study the co-determination of growth and income inequality in both the closed and open economy, as well as the spillover effects of policy in one country to outcomes in others.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 37-83 |
| Number of pages | 47 |
| Journal | Econometrica |
| Volume | 86 |
| Issue number | 1 |
| DOIs | |
| State | Published - Jan 2018 |
All Science Journal Classification (ASJC) codes
- Economics and Econometrics
Keywords
- Endogenous growth
- income distribution
- income inequality
- innovation
- trade and growth