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Distribution and Growth in an Economy with Limited Needs: Variable Markups and 'the End of Work'

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  • Gilles Saint-Paul

Abstract

This article studies a model of the distribution of income under bounded needs. Utility derived from any given is bounded from above and demand is therefore not isoelastic. On the other hand, introducing new varieties always increases utility. It is assumed that each variety is owned by a monopoly. Workers can specialise in material goods production or in the knowledge sector, which designs new varieties. As productivity increases, the economy moves from a 'Solovian zone' where wages increase with productivity, to a 'Marxian' zone where they paradoxically decline with productivity. Copyright 2006 Royal Economic Society.

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  • Gilles Saint-Paul, 2006. "Distribution and Growth in an Economy with Limited Needs: Variable Markups and 'the End of Work'," Economic Journal, Royal Economic Society, vol. 116(511), pages 382-407, April.
  • Handle: RePEc:ecj:econjl:v:116:y:2006:i:511:p:382-407
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    Cited by:

    1. Behrens, Kristian & Murata, Yasusada, 2012. "Globalization and individual gains from trade," Journal of Monetary Economics, Elsevier, vol. 59(8), pages 703-720.
    2. Foellmi, Reto & Zweimüller, Josef, 2006. "Mass Consumption, Exclusion and Unemployment," CEPR Discussion Papers 5824, C.E.P.R. Discussion Papers.
    3. repec:esx:essedp:754 is not listed on IDEAS
    4. Alberto Alesina & Michele Battisti & Joseph Zeira, 2015. "Technology and Labor Regulations: Theory and Evidence," NBER Working Papers 20841, National Bureau of Economic Research, Inc.
    5. Wang, T & Wright, GC, 2014. "Techonolgical Change and the Income Distribution: Theory and Some Evidence," Economics Discussion Papers 12226, University of Essex, Department of Economics.
    6. Joseph Zeira, 2009. "Why and How Education Affects Economic Growth," Review of International Economics, Wiley Blackwell, vol. 17(3), pages 602-614, August.
    7. Demmou, Lilas, 2012. "How product innovation in the North may immiserize the South," Journal of Development Economics, Elsevier, vol. 97(2), pages 293-304.
    8. Christian Kiedaisch, 2016. "Growth and welfare effects of intellectual property rights when consumers differ in income," ECON - Working Papers 221, Department of Economics - University of Zurich, revised Jul 2017.

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