Innovation, Reallocation, and Growth

Daron Acemoglu, Ufuk Akcigit, Harun Alp, Nicholas Bloom and William Kerr

American Economic Review, 2018, vol. 108, issue 11, 3450-91

Abstract: We build a model of firm-level innovation, productivity growth, and reallocation featuring endogenous entry and exit. A new and central economic force is the selection between high- and low-type firms, which differ in terms of their innovative capacity. We estimate the parameters of the model using US Census microdata on firm-level output, R&D, and patenting. The model provides a good fit to the dynamics of firm entry and exit, output, and R&D. Taxing the continued operation of incumbents can lead to sizable gains (of the order of 1.4 percent improvement in welfare) by encouraging exit of less productive firms and freeing up skilled labor to be used for R&D by high-type incumbents. Subsidies to the R&D of incumbents do not achieve this objective because they encourage the survival and expansion of low-type firms.

JEL-codes: D21 D24 H25 L52 O31 O34 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/aer.20130470
References: Add references at CitEc
Citations: View citations in EconPapers (214)

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Related works:
Working Paper: Innovation, Reallocation, and Growth (2017)
Working Paper: Innovation, Reallocation and Growth (2015)
Working Paper: INNOVATION, REALLOCATION AND GROWTH (2013)
Working Paper: Innovation, Reallocation and Growth (2013)
Working Paper: Innovation, reallocation and growth (2013)
Working Paper: Innovation, Reallocation and Growth (2013)
Working Paper: Innovation, Reallocation and Growth (2013)
Working Paper: Innovation, reallocation and growth (2013)
Working Paper: Innovation, Reallocation and Growth (2012)
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