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Innovation, Diffusion and the Distribution of Income in a Malthusian Economy

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  • Staley, Mark

Abstract

Between 5000 BCE and 1800, the population of the world grew 120-fold despite constraints on the total amount of land available for production. This paper develops a model linking population growth to increasing productivity driven by random innovation and diffusion. People are endowed with a set of skills obtained from their parents or neighbours, but those skills are imperfectly applied during their lifetimes. The resulting variation in productivity leads to a distribution of income and to a process of diffusion whereby high-income activities spread at the expense of low-income activities. An analytic formula is derived for the steady-state distribution of income. The model predicts that the rate of growth of population approaches an asymptotic limit, whereupon there are no scale effects. The model also predicts that if the rate of diffusion of knowledge is increased, the growth rate will increase.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9849.

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Date of creation: 15 May 2008
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Handle: RePEc:pra:mprapa:9849

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Related research

Keywords: Selection; Malthusian; Diffusion; Innovation;

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References

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  1. Oded Galor & Omer Moav, 2000. "Natural Selection and the Origin of economic Growth," Working Papers 2000-18, Brown University, Department of Economics.
  2. Gregory Clark & Gillian Hamilton, 2006. "Survival of the Richest: The Malthusian Mechanism in Pre-Industrial England," Working Papers 615, University of California, Davis, Department of Economics.
  3. Merton, Robert C., 1973. "An asymptotic theory of growth under uncertainty," Working papers 673-73., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  4. Oded Galor, 2004. "From Stagnation to Growth: Unified Growth Theory," GE, Growth, Math methods 0409003, EconWPA.
  5. Quamrul Ashraf & Oded Galor, 2008. "Malthusian Population Dynamics: Theory and Evidence," Working Papers 2008-6, Brown University, Department of Economics.
  6. Jones, Charles I, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 495-525, May.
  7. Bourguignon, Francois, 1974. "A particular class of continuous-time stochastic growth models," Journal of Economic Theory, Elsevier, vol. 9(2), pages 141-158, October.
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Cited by:
  1. Staley, Mark, 2011. "Growth and the diffusion of ideas," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 470-478.

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