Division of Labour and Innovation with Indivisibilities: Lessons from A. Smith
AbstractWe study division of labour, innovation, and economic growth in a world with indivisibilities. In order to increase the division of labour, more specialized, labour saving capital varieties must be invented, which can be done only subject to a minimum size requirement. Thus, the division of labour is limited by the size of the market. Furthermore, the division of labour has a major impact on labour productivity. Due to the minimum size requirement, producers want to charge nonlinear prices (two part tariffs). In the model we obtain interesting dynamics. Depending on the parameters our economy can grow unboundedly, can grow up to a certain (even very high) level and then stagnate, or can be stuck in a poverty trap.
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Bibliographic InfoArticle provided by National Bank of Poland, Economic Institute in its journal Bank i Kredyt.
Volume (Year): 43 (2012)
Issue (Month): 6 ()
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More information through EDIRC
Innovation; indivisibility; division of labour; extent of the market;
Find related papers by JEL classification:
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
- D90 - Microeconomics - - Intertemporal Choice - - - General
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D40 - Microeconomics - - Market Structure and Pricing - - - General
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