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Learning and Knowledge Diffusion in a Global Economy

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  • Kunal Dasgupta

Abstract

I develop a dynamic general equilibrium model to understand how multinationals affect host countries through knowledge diffusion. Workers in the model learn from their managers and knowledge diffusion takes place through worker mobility. Unlike in a model without learning, I present a novel mechanism through which an integrated equilibrium represents a Pareto improvement for the host country. I go on to explore other dynamic consequences of integration. The entry of multinationals makes the lifetime earning profiles of host country workers steeper. At the same time, if agents learn fast enough, integration creates unequal opportunities, thereby widening inequality. The ex-workers of foreign multinationals also found new firms which are, on average, larger than the largest firms under autarky.

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Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-410.

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Length: 45 pages
Date of creation: 30 Sep 2010
Date of revision:
Handle: RePEc:tor:tecipa:tecipa-410

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Keywords: Multinationals; knowledge diffusion; learning; worker mobility; Pareto improvement; spin-offs.;

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Cited by:
  1. Serafinelli, Michel, 2013. "Good Firms, Worker Flows and Productivity," MPRA Paper 47508, University Library of Munich, Germany.
  2. Stoyanov, Andrey & Zubanov, Nikolay, 2013. "Money on the Table? Firms' and Workers' Gains from Productivity Spillovers through Worker Mobility," IZA Discussion Papers 7702, Institute for the Study of Labor (IZA).
  3. Sampson, Thomas, 2013. "Brain drain or brain gain? Technology diffusion and learning on-the-job," Journal of International Economics, Elsevier, vol. 90(1), pages 162-176.
  4. Thomas Sampson, 2012. "Brain drain or brain gain? Technology diffusion and learning on-the-job," LSE Research Online Documents on Economics 51503, London School of Economics and Political Science, LSE Library.
  5. Thomas Sampson, 2012. "Brain Drain or Brain Gain? Technology Diffusion and Learning On-the-job," CEP Discussion Papers dp1168, Centre for Economic Performance, LSE.

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