Working papers, Department of Economics, WU (Wirtschaftsuniversität Wien)
Economic Policy in a Model of Endogenous Growth
() and Martin Zagler
Abstract: We develop a model of endogenous growth based on the
division of labour in order to discuss policy issues. The engine of growth
is the worker's incentive to achieve higher income, thereby inducing an
increase in the degree of specialisation. The genuine contribution of this
paper is that both supply side and demand side policies may stimulate
long-run economic growth, and do not only induce level shifts. On the
supply side, an increase in productivity of innovative workers, alongside
with investment in infrastructure, human capital, and improvements in the
market setting may stimulate growth. On the demand side, we find that
transfers to innovative workers, a reduction in consumption taxes, an
increase of labour income taxation of the specialised workforce, and a
redistribution towards specialised workers will foster economic growth.
Keywords: Economic Growth; Division of Labour; Growth Policy; (follow links to similar papers)
JEL-Codes: O38; O40; (follow links to similar papers)
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design Joakim Ekebom