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Vertical Diversity, Communication Gap and Equilibrium Growth

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  • Das Satya P

    (Indian Statistical Institute, Delhi)

Abstract

This paper examines the effect of vertical diversity in workers' skill on the long-run growth rate of an economy. It uses a two-sector model where the technology of the consumption-good sector is supermodular and that of the R&D sector is submodular. By adopting Grossman and Maggi's (2000) model to a framework of growth, it shows first that diversity is conducive to growth. As the main innovation, a notion of communication gap is introduced among workers. It is shown that if vertical diversity is sufficiently high relative to the communication gap, the growth rate may not increase with diversity; there may be an inverse-U shaped relationship.

Suggested Citation

  • Das Satya P, 2005. "Vertical Diversity, Communication Gap and Equilibrium Growth," The B.E. Journal of Macroeconomics, De Gruyter, vol. 5(1), pages 1-42, November.
    • Handle: RePEc:bpj:bejmac:v:topics.5:y:2005:i:1:n:22
    DOI: 10.2202/1534-5998.1334
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    Cited by:

    1. Kuo-Hsing Kuo & Cheng-Te Lee & Chen Fang, 2014. "Free Trade and Economic Growth," Australian Economic Papers, Wiley Blackwell, vol. 53(1-2), pages 69-76, June.
    2. Cheng-te Lee & Chen Fang & Kuo-hsing Kuo, 2014. "Common Market and Equilibrium Growth," Economics Bulletin, AccessEcon, vol. 34(1), pages 480-493.
    3. Kuo-Hsing Kuo & Cheng-Te Lee, 2017. "Economic Integration, Growth and Income Distribution," Australian Economic Papers, Wiley Blackwell, vol. 56(1), pages 59-71, March.
    4. Cheng‐Te Lee & Shang‐Fen Wu, 2023. "Technology advantage, terms of trade, and pattern of trade," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(1), pages 166-174, March.
    5. Cheng-Te Lee & Shang-Fen Wu & Chen Fang, 2013. "Growth and the Enlargement of a Common Market," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 3(6), pages 1-3, December.

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