Publication: Growth, Trade, and Inequality
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Date
2014
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Grossman, Gene, and Elhanan Helpman. 2014. Growth, Trade, and Inequality. Working Paper, Department of Economics, Harvard University.
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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 sector or a manufacturing sector that produces differentiated goods. Each research project generates a new variety of the differentiated product and a random technology for producing it. Technologies differ in complexity and productivity, and technological sophistication is complementary to 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 and conditions in one country to outcomes in others.
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endogenous growth, innovation, income distribution, income inequality, trade and growth
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