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Growth, Trade, and Inequality

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  • Gene M. Grossman
  • Elhanan Helpman

Abstract

We introduce firm and worker heterogeneity into a model of innovation-driven endogenous growth. Individuals who differ in ability sort into either a research sector or a manufacturing sector that produces differentiated goods. Each research project generates a new variety of the differentiated product and a random technology for producing it. Technologies differ in complexity and productivity, and technological sophistication is complementary to worker ability. We study the co-determination of growth and income inequality in both the closed and open economy, as well as the spillover effects of policy and conditions in one country to outcomes in others.

Suggested Citation

  • Gene M. Grossman & Elhanan Helpman, 2014. "Growth, Trade, and Inequality," NBER Working Papers 20502, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:20502
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    References listed on IDEAS

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    1. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
    2. Grossman, Gene M. & Helpman, Elhanan & Kircher, Philipp, 2013. "Matching and Sorting in a Global Economy," SIRE Discussion Papers 2013-69, Scottish Institute for Research in Economics (SIRE).
    3. Christian MORRISSON & Fabrice MURTIN, 2011. "Average income inequality between countries (1700-2030)," Working Papers P25, FERDI.
    4. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    5. Christian MORRISSON & Fabrice MURTIN, 2011. "Internal income inequality and global inequality," Working Papers P26, FERDI.
    6. Wojciech Kopczuk & Emmanuel Saez & Jae Song, 2010. "Earnings Inequality and Mobility in the United States: Evidence from Social Security Data Since 1937," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(1), pages 91-128.
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    More about this item

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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