What is it about?
This paper introduces endogenous technical change based on the production of new ideas in the model of distributive conflict by Richard Goodwin (1967). We argue that our framework sheds some light on the dynamics of employment and the share of labor in the United States.
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Why is it important?
The model produces endogenous cycles in employment and income distribution, even though it is based on dynamic optimization. It also identifies key policy variables, such as innovation subsidies or labor market protection, and their role in affecting the long-run position of the economy. The model is calibrated and simulated to match US data.
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This page is a summary of: Endogenous technical change, employment and distribution in the Goodwin model of the growth cycle, Studies in Nonlinear Dynamics & Econometrics, January 2015, De Gruyter,
DOI: 10.1515/snde-2013-0117.
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