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Vertical diversity and equilbrium growth

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  • Satya P. Das

    (Indian Statistical Institute, New Delhi)

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.

Suggested Citation

  • Satya P. Das, 2004. "Vertical diversity and equilbrium growth," Discussion Papers 04-18, Indian Statistical Institute, Delhi.
    • Handle: RePEc:alo:isipdp:04-18
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    File URL: http://www.isid.ac.in/~pu/dispapers/dp04-18.pdf
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    References listed on IDEAS

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    4. Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
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    More about this item

    Keywords

    Diversity; talent distribution; supermodular technology; submodular technology; growth; skill; R&D; innovations;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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