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Distribution and Growth in an Economy with Limited Needs: Variable Markups and 'the End of Work'

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  • Gilles Saint-Paul

Abstract

This article studies a model of the distribution of income under bounded needs. Utility derived from any given is bounded from above and demand is therefore not isoelastic. On the other hand, introducing new varieties always increases utility. It is assumed that each variety is owned by a monopoly. Workers can specialise in material goods production or in the knowledge sector, which designs new varieties. As productivity increases, the economy moves from a 'Solovian zone' where wages increase with productivity, to a 'Marxian' zone where they paradoxically decline with productivity. Copyright 2006 Royal Economic Society.

Suggested Citation

  • Gilles Saint-Paul, 2006. "Distribution and Growth in an Economy with Limited Needs: Variable Markups and 'the End of Work'," Economic Journal, Royal Economic Society, vol. 116(511), pages 382-407, April.
    • Handle: RePEc:ecj:econjl:v:116:y:2006:i:511:p:382-407
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    Citations

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    Cited by:

    1. Alberto Alesina & Michele Battisti & Joseph Zeira, 2018. "Technology and labor regulations: theory and evidence," Journal of Economic Growth, Springer, vol. 23(1), pages 41-78, March.
    2. Behrens, Kristian & Murata, Yasusada, 2012. "Globalization and individual gains from trade," Journal of Monetary Economics, Elsevier, vol. 59(8), pages 703-720.
    3. Gilles Saint-Paul, 2021. "Secular satiation," Journal of Economic Growth, Springer, vol. 26(3), pages 291-327, September.
    4. repec:esx:essedp:754 is not listed on IDEAS
    5. Wang, Tianxi & Wright, Greg C, 2014. "Techonolgical Change and the Income Distribution: Theory and Some Evidence," Economics Discussion Papers 12226, University of Essex, Department of Economics.
    6. Reto Foellmi & Josef Zweim ller, 2010. "Mass versus Exclusive Goods, and Formal-Sector Employment," Diskussionsschriften dp1005, Universitaet Bern, Departement Volkswirtschaft.
    7. Zweimüller, Josef & Foellmi, Reto, 2006. "Mass Consumption, Exclusion and Unemployment," CEPR Discussion Papers 5824, C.E.P.R. Discussion Papers.
    8. Reto Foellmi & Josef Zweimüller, 2011. "Exclusive Goods and Formal-Sector Employment," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(1), pages 242-272, January.
    9. Christian Kiedaisch, 2021. "Growth and welfare effects of intellectual property rights when consumers differ in income," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(4), pages 1121-1170, November.
    10. Kristian Behrens & Yasusada Murata, 2012. "Globalization and Individual Gains from Trade (revised version)," Cahiers de recherche 1218, CIRPEE.
    11. Joseph Zeira, 2009. "Why and How Education Affects Economic Growth," Review of International Economics, Wiley Blackwell, vol. 17(3), pages 602-614, August.
    12. repec:dau:papers:123456789/5053 is not listed on IDEAS
    13. Wang, Tianxi & Wright, Greg C., 2020. "Increasing returns to scale within limits: A model of ICT and its effect on the income distribution and occupation choice," Journal of Economic Theory, Elsevier, vol. 189(C).
    14. Marti Mestieri & Danial Lashkari & Diego Comin, 2015. "Structural Transformations with Long-Run Price and Income Effects," 2015 Meeting Papers 437, Society for Economic Dynamics.
    15. Demmou, Lilas, 2012. "How product innovation in the North may immiserize the South," Journal of Development Economics, Elsevier, vol. 97(2), pages 293-304.

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