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Ability-heterogeneity, entrepreneurship, and economic growth

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  • Jiang, Neville
  • Wang, Ping
  • Wu, Haibin

Abstract

This paper develops an endogenous growth model of occupational choice with overlapping generations heterogeneous in entrepreneurial ability. While an increase in the number of entrepreneurs creates a growth-enhancing variety effect, the reduced overall quality of entrepreneurial ability retards growth. As a result, the number of entrepreneurs and output growth need not be positively related, in response to changes in the ability distribution. While cheaper financial operation and higher manufacturing productivity are both growth-enhancing, they have different effects on equilibrium factor prices and equilibrium financial markups. Additionally, the long-run growth consequences of subsidies to entrepreneurship and credit-market imperfections are studied.

Suggested Citation

  • Jiang, Neville & Wang, Ping & Wu, Haibin, 2010. "Ability-heterogeneity, entrepreneurship, and economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 34(3), pages 522-541, March.
    • Handle: RePEc:eee:dyncon:v:34:y:2010:i:3:p:522-541
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    2. Jun Wang, 2020. "Will Entrepreneurship Promote Productivity Growth in China?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 28(3), pages 73-89, May.
    3. Lindič, Jaka & Bavdaž, Mojca & Kovačič, Helena, 2012. "Higher growth through the Blue Ocean Strategy: Implications for economic policy," Research Policy, Elsevier, vol. 41(5), pages 928-938.
    4. Premand, Patrick & Brodmann, Stefanie & Almeida, Rita & Grun, Rebekka & Barouni, Mahdi, 2016. "Entrepreneurship Education and Entry into Self-Employment Among University Graduates," World Development, Elsevier, vol. 77(C), pages 311-327.
    5. Uras, Burak R., 2016. "Long-Term Investment And Net-Worth Building With Limited Contract Enforcement," Macroeconomic Dynamics, Cambridge University Press, vol. 20(1), pages 276-312, January.
    6. Vera Catarina Rocha, 2012. "The entrepreneur in economic theory: from an invisible man toward a new research field," FEP Working Papers 459, Universidade do Porto, Faculdade de Economia do Porto.
    7. Takaaki Morimoto, 2018. "Occupational choice and entrepreneurship: effects of R&D subsidies on economic growth," Journal of Economics, Springer, vol. 123(2), pages 161-185, March.
    8. Burak Uras, 2012. "Entrepreneurship and Technology Choice with Limited Contract Enforcement," 2012 Meeting Papers 599, Society for Economic Dynamics.

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