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Vertical diversity and equilbrium growth

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Author Info
Satya P. Das () (Indian Statistical Institute, New Delhi)

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Abstract

This paper examines the effect of an increase in vertical diversity in workers' skill on the long run growth rate of an economy. It uses a two-secror model where the techonology 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 based on R&D, it shows first that diversity is condutive to growth. As the main innovation, communication gap is introduced among workers. It is then shown that growth may not be increasing with diversity. There may be an inverse-U shaped relationship.

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Publisher Info
Paper provided by Indian Statistical Institute, New Delhi, India in its series Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers with number 04-18.

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Length: 33 pages
Date of creation: Jun 2004
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Handle: RePEc:ind:isipdp:04-18

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Related research
Keywords: Diversity talent distribution supermodular technology submodular technology growth skill R&D innovations

Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
O2 - Economic Development, Technological Change, and Growth - - Development Planning and Policy
O3 - Economic Development, Technological Change, and Growth - - Technological Change

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  1. Kremer, Michael, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 551-75, August. [Downloadable!] (restricted)
  2. Barro, Robert J, 2000. " Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March. [Downloadable!] (restricted)
  3. Gene M. Grossman & Giovanni Maggi, 2000. "Diversity and Trade," American Economic Review, American Economic Association, vol. 90(5), pages 1255-1275, December. [Downloadable!] (restricted)
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  4. Easterly, William & Levine, Ross, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1203-50, November.
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  5. Banerjee, Abhijit V & Duflo, Esther, 2003. " Inequality and Growth: What Can the Data Say?," Journal of Economic Growth, Springer, vol. 8(3), pages 267-99, September. [Downloadable!] (restricted)
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  6. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S103-26, October. [Downloadable!] (restricted)
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  7. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-28, June. [Downloadable!] (restricted)
  8. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1991. "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 503-30, May. [Downloadable!] (restricted)
    Other versions:
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