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Organization and inequality in a knowledge economy

Garicano, Luis and Rossi-Hansberg, Esteban (2006) Organization and inequality in a knowledge economy. Quarterly Journal of Economics, 121 (4). pp. 1383-1435. ISSN 0033-5533

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Abstract

We present an equilibrium theory of the organization of work in an economy where knowledge is an essential input in production and agents are heterogeneous in skill. Agents organize production by matching with others in knowledge hierarchies designed to use and communicate their knowledge efficiently. Relative to autarky, organization leads to larger cross-sectional differences in knowledge and wages: low skill workers learn and earn relatively less. We show that improvements in the technology to acquire knowledge lead to opposite implications on wage inequality and organization than reductions in communication costs.

Item Type: Article
Official URL: http://www.mitpressjournals.org/loi/qjec
Additional Information: © 2006 President and Fellows of Harvard College and the Massachusetts Institute of Technology
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor
Sets: Research centres and groups > Managerial Economics and Strategy Group
Departments > Management
Research centres and groups > Centre for Economic Performance (CEP)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 27 Oct 2009 16:54
URL: http://eprints.lse.ac.uk/25550/

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