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Knowledge-based hierarchies: using organizations to understand the economy

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  • Garicano, Luis
  • Rossi-Hansberg, Esteban

Abstract

We argue that incorporating the decision of how to organize the acquisition, use, and communication of knowledge into economic models is essential to understand a wide variety of economic phenomena. We survey the literature that has used knowledge-based hierarchies to study issues like the evolution of wage inequality, the growth and productivity of firms, economic development, the gains from international trade, as well as offshoring and the formation of international production teams, among many others. We also review the nascent empirical literature that has, so far, confirmed the importance of organizational decisions and many of its more salient implications.

Suggested Citation

  • Garicano, Luis & Rossi-Hansberg, Esteban, 2014. "Knowledge-based hierarchies: using organizations to understand the economy," LSE Research Online Documents on Economics 60532, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:60532
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    More about this item

    Keywords

    Knowledge; hierarchies; wage inequality; international trade;
    All these keywords.

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • N0 - Economic History - - General
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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