The Division of Labor, Coordination Costs and the Growth of Government

Lewis S. Davis ()
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Lewis S. Davis: Department of Economics, SUNY-Oswego

Departmental Working Papers from Department of Economics, SUNY-Oswego

Abstract: The paper develops a dynamic, general equilibrium model of specialization-driven growth in which the private cost of coordinating among specialists is a function of public expenditure on physical and institutional infrastructure. Growth is characterized by endogenous increases in labor specialization, the capital-labor ratio, coordination costs, market size, and the interdependence of economic agents. In addition, model provides an explanation for a frequently ignored stylized fact of economic growth, the secular rise of government's share of output, in terms of the economic role of the government.

Keywords: development; endogenous growth; labor specialization; dynamic model; institutions; division of labor; growth; transactions costs; coordination; coordination costs; contract enforcement; organization; neoinstitutionalism; traditional economy; interpersonal exchange; government; transaction sector; public investment; public capital (search for similar items in EconPapers)
JEL-codes: H4 O1 O4 (search for similar items in EconPapers)
Pages: 45 pages
Date: 1998-12-01, Revised 1998-12-01
New Economics Papers: this item is included in nep-ltv and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:nyo:oswaaa:199803

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