American Economic Review Vol. 104 No. 4 2014
Misallocation and Growth
open access
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.
- DOI
- 10.1257/aer.104.4.1149
- Volume
- 104
- Issue
- 4
- Pages
- 1149-1171
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref