Growth, Trade, and Inequality

Gene M. Grossman, Elhanan Helpman

Research output: Contribution to journalArticlepeer-review

72 Scopus citations

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 languageEnglish (US)
Pages (from-to)37-83
Number of pages47
JournalEconometrica
Volume86
Issue number1
DOIs
StatePublished - Jan 2018

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Keywords

  • Endogenous growth
  • income distribution
  • income inequality
  • innovation
  • trade and growth

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