Misallocation and growth

Boyan Jovanovic

    Research output: Contribution to journalArticlepeer-review

    Abstract

    This paper models growth via on-the-job learning when firms and workers are heterogeneous. It is an overlapping generations model in which young agents match with the old. More efficient assignments lead to faster long-run growth, more inequality, and less turnover in the distribution of human capital. Constant-growth paths are characterized for general functional forms and then, for the Cobb-Douglas case, the transition dynamics are solved analytically when the skill of the young is log-normally distributed and the initial human capital of the old generation is also log-normal. Growth and inequality move together on the transition to the balanced growth path.

    Original languageEnglish (US)
    Pages (from-to)1149-1171
    Number of pages23
    JournalAmerican Economic Review
    Volume104
    Issue number4
    DOIs
    StatePublished - Apr 2014

    ASJC Scopus subject areas

    • Economics and Econometrics

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