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Entrepreneurship and Growth - An Overlapping Generations Approach - Author info | Abstract | Publisher info | Download info | Related research | Statistics Clemens, Christiane
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This paper discusses a two-sector neoclassical overlapping generations economy with intermediate and final goods in the spirit of Romer (1990). The risk averse agents engage in one of two alternative occu pations: either firrm-ownership in the intermediate goods sector, char acterized by monopolistic competition, or employment as a worker in this sector. The occupational choice under risk endogenizes the num ber of firms and products in the intermediate goods industry. Since entrepreneurial profits are stochastic, an inefficiently low number of agents chooses firm-ownership. We find that expected profits of mo nopolists do not vanish in equilibrium and that the level of economic performance is inefficiently low due to the presence of risk. This result carries over to a suboptimally low growth rate in an enodgenous growth context.
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Paper provided by Universität Hannover, Wirtschaftswissenschaftliche Fakultät in its series Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Universität Hannover with number
dp-304.
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Length: 30 pages
Date of creation: Oct 2004Date of revision:
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Keywords: OLG occupational choice monopolistic competition growth Find related papers by JEL classification: D4 - Microeconomics - - Market Structure and Pricing D5 - Microeconomics - - General Equilibrium and Disequilibrium D8 - Microeconomics - - Information, Knowledge, and Uncertainty D9 - Microeconomics - - Intertemporal Choice and Growth O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
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Christiane Clemens & Maik Heinemann, 2005.
"On the Effects of Redistribution on Growth and Entrepreneurial Risk-Taking ,"
Working Paper Series in Economics
6, University of Lüneburg, Institute of Economics.
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