An Empirical Model of Growth Through Product Innovation

By Rasmus Lentz, Dale T. Mortensen. Social Science Research Network, 2005

402 citations recorded by the source corpus.

Productivity dispersion across firms is large and persistent, and worker reallocation among firms is an important source of productivity growth. The purpose of the paper is to estimate the structure of an equilibrium model of growth through innovation. The model is a modified version of the Schumpeterian theory of firm evolution and growth developed by Klette and Kortum (2002). The data set is a panel of Danish firms than includes information on value added, employment, and wages. The model’s fit is good and the structural parameter estimates have interesting implications for the aggregate growth rate and the contribution of worker reallocation to it.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/bb758c4c4285f7a4415e188ba85fc05da1475ba1

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Citations in the corpus

Growth through Heterogeneous Innovations (2018, methodology): “This distribution is the main proxy for the rm size distribution in Klette and Kortum (2004) and Lentz and Mortensen (2008).”
Technological Innovation, Resource Allocation, and Growth (2012, neutral): “Our finding that innovating firms increase their labor demand suggests that innovation is more likely to be labor augmenting, and is consistent with the findings of Lentz and Mortensen (2008) for Danish firms.”
On the mechanics of firm growth (2011, neutral): “[32] Lentz, Rasmus and Dale T.”
Technological Innovation, Resource Allocation and Growth (2017, background): “Our paper is related to the growing body of work that explores the link between innovation and firm growth dynamics (Caballero and Jaffe, 1993; Lentz and Mortensen, 2008; Akcigit and Kerr, 2010; Acemoglu, Akcigit, Bloom, and William, 2011).”
What Do We Learn from Schumpeterian Growth Theory (2013, neutral): “2See Klette and Kortum (2004), Lentz and Mortensen (2008), Akcigit and Kerr (2010), and Acemoglu, Akcigit, Bloom and Kerr (2013) 3Thus we are not looking at the aspects or issues that could be addressed by the Schumpeterian model and also by other models, including Romer’s (1990) product variety…”
Back to Basics: Basic Research Spillovers, Innovation Policy and Growth (2013, background): “26See Bloom (2009) and Lentz and Mortensen (2008) for further description and usage information on SMM. Appendix E provides additional details about the computer algorithm.”
Finance and Employment (2012, neutral): “See also Osotimehin and Pappada (2010) on firms exit decisions in a dynamic framework with heterogeneous firms and credit constraints. comprise 34 years for 28 industries and 63 countries.”
A Unified Theory of Firm Selection and Growth (2009, neutral): “6 Lentz and Mortensen (2008) and Bernard, Redding, and Schott (2009) develop models of …rm dynamics extending the theories of Klette and Kortum (2004) and Hopenhayn (1992) respectively.”
The Anatomy of French Production Hierarchies (2012, neutral): “Most models of firm dynamics ðLentz and Mortensen ½2008 , among many othersÞ share these features with the theory outlined in Section II when firms keep the number of layers constant.”
Demographic Origins of the Startup Deficit (2019, neutral): “Ouimet and Zarutskie (2014) show that new and young firms hire a disproportionate share of young workers and show the share of young workers in a state is predictive of the startup rate, especially in high-tech sectors.”
Market Power and Innovation in the Intangible Economy (2019, background): “A generalization to CES would imply a similar bound on prices, up to the point that the wedge in marginal costs between the first- and secondbest firms exceeds the monopolist markup (see, e.g., Lentz and Mortensen 2008).”