Open AccessOrganization and Inequality in a Knowledge Economy*
Author(s) -
Luis Garicano,
Esteban RossiHansberg
Publication year - 2006
Publication title -
the quarterly journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 34.573
H-Index - 259
eISSN - 1531-4650
pISSN - 0033-5533
DOI - 10.1162/qjec.121.4.1383
Subject(s) - inequality , knowledge economy , economics , labour economics , economic system , economy , mathematics , mathematical analysis
We present an equilibrium theory of the organization of work in an economy where knowledge is an essential input in production and agents are heterogeneous in skill. Agents organize production by matching with others in knowledge hierarchies designed to use and communicate their knowledge efficiently. Relative to autarky, organization leads to larger cross-sectional differences in knowledge and wages: low skill workers learn and earn relatively less. We show that improvements in the technology to acquire knowledge lead to opposite implications on wage inequality and organization than reductions in communication costs