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Growth and Ideas,
- Publisher
- de Gruyter
- Copyright
- ©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
- ISSN
- 1935-1690
- eISSN
- 1534-5998
- DOI
- 10.2202/1534-5998.1334
- Publisher site
- See Article on Publisher Site
Abstract
AbstractThis paper examines the effect of vertical diversity in workers' skill on the long-run growth rate of an economy. It uses a two-sector model where the technology of the consumption-good sector is supermodular and that of the R&D sector is submodular. By adopting Grossman and Maggi's (2000) model to a framework of growth, it shows first that diversity is conducive to growth. As the main innovation, a notion of communication gap is introduced among workers. It is shown that if vertical diversity is sufficiently high relative to the communication gap, the growth rate may not increase with diversity; there may be an inverse-U shaped relationship.
Journal
The B E Journal of Macroeconomics – de Gruyter
Published: Nov 23, 2005
Keywords: Diversity; Talent Distribution; supermodular technology; submodular technology; growth; skill; R&D