Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/89509
Authors: 
Ciarli, Tommaso
Lorentz, André
Savona, Maria
Valente, Marco
Year of Publication: 
2012
Series/Report no.: 
LEM Working Paper Series 2012/06
Abstract: 
The paper proposes a model that explains cross-country growth divergences over time for different aspects of structural change. The model formalises the links between production technology, firm organisation (functional composition of employment) on the supply side and the endogenous evolution of income distribution and consumption patterns on the demand side. Wage distribution is the main channel between the organisation of firms and consumption patterns, and firm selection is the main trigger of investment in new capital, productivity gains and cumulative growth. The model is able to reproduce empirical stylised facts on growth and income inequality associated with different stages of growth. We use VARs to estimate the causal relations between the three aspects of structural change. We then analyse the effect of the parameters that define the structure of an economy - and the way in which this unfolds through time - on growth and income distribution via numerical simulation. Product variety, differences in consumption preferences, organisational complexity and production technology determine whether the economy experiences a take-off or a stagnating growth, and the associated distribution of income.
Subjects: 
structural change
growth
income distribution
consumption
technological change
JEL: 
O41
L16
C63
O14
Document Type: 
Working Paper

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