Knowledge Growth and the Allocation of Time
We analyze a model economy with many agents, each with a different productivity level. Agents divide their time between two activities: producing goods with the production-related knowledge they already have, and interacting with others in search of new, productivity-increasing ideas. These choices jointly determine the economy's current production level and its rate of learning and real growth. Individuals' time allocation decisions depend on the knowledge distribution because the productivity levels of others determine their own chances of improving their productivities through search. The time allocations of everyone in the economy in turn determine the evolution of its knowledge distribution. We construct the balanced growth path for this economy, thereby obtaining a theory of endogenous growth that captures in a tractable way the social nature of knowledge creation. We also study the allocation chosen by an idealized planner who takes into account and internalizes the external benefits of search, and tax structures that implement an optimal solution. Finally, we provide two examples of alternative learning technologies, as concrete illustrations of other directions that might be pursued.
|Date of creation:||Oct 2011|
|Date of revision:|
|Publication status:||published as Robert E. Lucas Jr. & Benjamin Moll, 2014. "Knowledge Growth and the Allocation of Time," Journal of Political Economy, University of Chicago Press, vol. 122(1), pages 1 - 51.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fernando E. Alvarez & Francisco J. Buera & Robert E. Lucas, Jr., 2008. "Models of Idea Flows," NBER Working Papers 14135, National Bureau of Economic Research, Inc.
- Xavier Gabaix, 2009.
"Power Laws in Economics and Finance,"
Annual Review of Economics,
Annual Reviews, vol. 1(1), pages 255-294, 05.
- Luttmer, Erzo G.J., 2012.
"Technology diffusion and growth,"
Journal of Economic Theory,
Elsevier, vol. 147(2), pages 602-622.
- Jovanovic, B. & Nyarko, Y., 1996.
"Learning by Doing and the Choice of Technology,"
96-25, C.V. Starr Center for Applied Economics, New York University.
- Jesse Perla & Christopher Tonetti, 2014.
"Equilibrium Imitation and Growth,"
Journal of Political Economy,
University of Chicago Press, vol. 122(1), pages 52 - 76.
- Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," Review of Economic Studies, Oxford University Press, vol. 58(1), pages 43-61.
- Bental, Benjamin & Peled, Dan, 1996. "The Accumulation of Wealth and the Cyclical Generation of New Technologies: A Search Theoretic Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(3), pages 687-718, August.
- Jess Benhabib & Alberto Bisin, 2009.
"The distribution of wealth and fiscal policy in economies with finitely lived agents,"
NBER Working Papers
14730, National Bureau of Economic Research, Inc.
- Jess Benhabib & Alberto Bisin & Shenghao Zhu, 2011. "The Distribution of Wealth and Fiscal Policy in Economies With Finitely Lived Agents," Econometrica, Econometric Society, vol. 79(1), pages 123-157, 01.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:17495. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.