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Growth, Trade, and Inequality

Author

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  • Gene M. Grossman
  • Elhanan Helpman

Abstract

We introduce firm and worker heterogeneity into a model of innovation-driven endogenous growth. Individuals who differ in ability sort into either a research sector or a manufacturing sector that produces differentiated goods. Each research project generates a new variety of the differentiated product and a random technology for producing it. Technologies differ in complexity and productivity, and technological sophistication is complementary to worker ability. We study the co-determination of growth and income inequality in both the closed and open economy, as well as the spillover effects of policy and conditions in one country to outcomes in others.
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Suggested Citation

  • Gene M. Grossman & Elhanan Helpman, 2016. "Growth, Trade, and Inequality," Working Paper 171001, Harvard University OpenScholar.
    • Handle: RePEc:qsh:wpaper:171001
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    File URL: http://scholar.harvard.edu/helpman/node/171001
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    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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