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Title: Growth, Trade, and Inequality

Author(s): Gene M. Grossman and Elhanan Helpman

Publication Date: November 2014

Keyword(s): endogenous growth, income distribution, income inequality, innovation and trade and growth

Programme Area(s): International Macroeconomics and International Trade and Regional Economics

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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Bibliographic Reference

Grossman, G and Helpman, E. 2014. 'Growth, Trade, and Inequality'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=10235