Misallocation and Growth

Boyan Jovanovic ()

American Economic Review, 2014, vol. 104, issue 4, 1149-71

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.

JEL-codes: D83 J24 J31 J41 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/aer.104.4.1149
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Citations: View citations in EconPapers (41)

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