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Growth, Trade, and Inequality
Author(s) -
Grossman Gene M.,
Helpman Elhanan
Publication year - 2018
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.3982/ecta14518
Subject(s) - inequality , economics , mathematical economics , econometrics , mathematics , mathematical analysis
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.