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Growth, Trade, and Inequality

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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 activity or a manufacturing sector. Research projects generate new varieties of a differentiated product. Projects differ in quality and the resulting technologies differ in productivity. In both sectors, there is a complementarity between firm quality and 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 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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    References listed on IDEAS

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    1. Christian MORRISSON & Fabrice MURTIN, 2011. "Average income inequality between countries (1700-2030)," Working Papers P25, FERDI.
    2. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
    3. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    4. Christian MORRISSON & Fabrice MURTIN, 2011. "Internal income inequality and global inequality," Working Papers P26, FERDI.
    5. Wojciech Kopczuk & Emmanuel Saez & Jae Song, 2010. "Earnings Inequality and Mobility in the United States: Evidence from Social Security Data Since 1937," The Quarterly Journal of Economics, Oxford University Press, vol. 125(1), pages 91-128.
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    Cited by:

    1. repec:eee:dyncon:v:87:y:2018:i:c:p:21-45 is not listed on IDEAS
    2. Debarsy, Nicolas & Dossougoin, Cyrille & Ertur, Cem & Gnabo, Jean-Yves, 2018. "Measuring sovereign risk spillovers and assessing the role of transmission channels: A spatial econometrics approach," Journal of Economic Dynamics and Control, Elsevier, vol. 87(C), pages 21-45.
    3. repec:red:issued:17-109 is not listed on IDEAS
    4. Angus Chu & Guido Cozzi, 2018. "Effects of Patents versus R&D subsidies on Income Inequality"," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 29, pages 68-84, July.

    More about this item

    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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