Working Paper: NBER ID: w20607
Authors: Luis Garicano; Esteban Rossi-Hansberg
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.
Keywords: Knowledge-Based Hierarchies; Wage Inequality; Firm Productivity; International Trade; Organizational Decisions
JEL Codes: D2; E24; F6; J3; L2; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Improvements in communication technology (L96) | Increased expert productivity (O49) |
| Increased expert productivity (O49) | Greater wage inequality (J31) |
| Improvements in communication technology (L96) | Greater wage inequality (J31) |
| Organizational decisions (D23) | Wage distributions (J31) |
| Organizational decisions (D23) | Firm productivity (D21) |
| Knowledge-based hierarchies (D80) | Wage inequality (J31) |
| Knowledge-based hierarchies (D80) | Productivity dynamics (O49) |