The Korean Economic Review
Productivity Distribution and Economic Growth
Jang Ok Cho (Sogang University), Hyo-Youn Chu (Kyung Hee University), Hyung Seok E. Kim (Korea Advanced Institute of Science and Technology), Jaywon Lee (Korea Advanced Institute of Science and Technology)Year 2016Vol. 32No. 1
This paper develops a tractable model of economic growth in which heterogeneoushouseholds produce capital à la Romer (1986). The paper demonstrates that depending onits varying degrees of persistence, productivity heterogeneity dictates economic growth. Aregression analysis based upon a reduced-form version of the model shows that the persistenceof human capital is the driving force behind the positive effects of productivity dispersion oneconomic growth.