On the Distribution of Income and Worker Assignment under Intrafirm Spillovers, with an Application to Ideas and Networks
AbstractI study the earnings structure and the equilibrium assignment of workers when workers exert intrafirm spillovers on each other. I allow for arbitrary spillovers provided that output depends on some aggregate index of workers' skill. Despite the possibility of increasing returns to skills, equilibrium typically exists. I show that equilibrium will typically be segregated and that the skill space can be partitioned into a set of segments and any firm hires from only one segment. Next, I apply the model to analyze the effect of information technology on segmentation and the distribution of income. There are two types of human capital, productivity and creativity, that is, the ability to produce ideas that may be duplicated over a network. Under plausible assumptions, inequality rises and then falls when network size increases, and the poorest workers cannot lose. I also analyze the impact of an improvement in worker quality and of an increased international mobility of ideas.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Political Economy.
Volume (Year): 109 (2001)
Issue (Month): 1 (February)
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Web page: http://www.journals.uchicago.edu/JPE/
Other versions of this item:
- Gilles Saint Paul, 1999. "On the distribution of income and worker assignment under intra-firm spillovers, with an application to ideas and networks," Economics Working Papers 417, Department of Economics and Business, Universitat Pompeu Fabra.
- Saint-Paul, Gilles, 1999. "On the Distribution of Income and Worker Assignment under Intra-Firm Spillovers, with an Application to Ideas And Networks," CEPR Discussion Papers 2290, C.E.P.R. Discussion Papers.
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
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