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dc.contributor.authorSaint-Paul, Gillesen_US
dc.date.accessioned2009-01-28T16:19:39Z-
dc.date.available2009-01-28T16:19:39Z-
dc.date.issued2001en_US
dc.identifier.urihttp://hdl.handle.net/10419/21124-
dc.description.abstractThis paper studies a model of the distribution of income under bounded needs. Utility derived from any given good reaches a bliss point at a finite consumption level of that good. On the other hand, introducing new varieties always increases utility. It is assumed that each variety is owned by a monopoly. Workers can specialize in material goods production or in the knowledge sector, which designs new varieties. It is shown that if the elasticity of labor supply to the knowledge sector is bounded, as productivity increases, the economy moves from a ?Solovian zone? where wages increase with productivity, to a ?Marxian? zone where the paradoxically decline with productivity. This is because as consumption of a given good increases, the price elasticity of demand falls, and markups increase to infinity as consumption reaches the unit elasticity point. Such a point typically exists because of the finiteness of needs. It is also shown that if individual creativity is more unevenly distributed then productivity, technical progress always increases inequality. Redistribution from profits to workers in the production sector always benefits arbitrarily poor workers regardless of their distortionary effect on the number of varieties, because diversity is not valued by very poor agents. In contrast, rich agents close enough to their bliss point can only be made better-off by an increase in diversity. If wages are set by monopoly unions rather than set competitively, they are proportional to productivity and the Marxian zone no longer exists. But technical progress always reduces employment in the material goods sector. International trade may reduce wages in poor countries and increase them in rich countries if under autarky the former consume less of each good that the latter.en_US
dc.language.isoengen_US
dc.publisheren_US
dc.relation.ispartofseriesIZA Discussion paper series 273en_US
dc.subject.jelD42en_US
dc.subject.jelE11en_US
dc.subject.jelO14en_US
dc.subject.jelE24en_US
dc.subject.jelF15en_US
dc.subject.jelD3en_US
dc.subject.jelO15en_US
dc.subject.jelJ31en_US
dc.subject.jelE25en_US
dc.subject.jelL12en_US
dc.subject.jelO3en_US
dc.subject.jelO41en_US
dc.subject.jelF12en_US
dc.subject.ddc330en_US
dc.subject.keywordIncome distributionen_US
dc.subject.keywordinnovationen_US
dc.subject.keywordknowledge economyen_US
dc.subject.keywordeconomic growthen_US
dc.subject.keywordtechnical changeen_US
dc.subject.keywordwagesen_US
dc.subject.keywordResearch and Developmenten_US
dc.subject.stwVerteilungstheorieen_US
dc.subject.stwNeue Wachstumstheorieen_US
dc.subject.stwMehr-Sektoren-Modellen_US
dc.subject.stwTechnischer Fortschritten_US
dc.subject.stwProduktivitäten_US
dc.subject.stwLohnen_US
dc.subject.stwGrenznutzentheorieen_US
dc.subject.stwMehrwerttheorieen_US
dc.subject.stwSteady-State-Wachstumen_US
dc.subject.stwMonopolen_US
dc.subject.stwOffene Volkswirtschaften_US
dc.subject.stwTheorieen_US
dc.titleDistribution and Growth in an Economy with Limited Needsen_US
dc.typeWorking Paperen_US
dc.identifier.ppn332361306en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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