TY - JOUR
AU1 - Kremer,, Michael
AB - Abstract This paper proposes a production function describing processes subject to mistakes in any of several tasks. It shows that high-skill workers—those who make few mistakes—will be matched together in equilibrium, and that wages and output will rise steeply in skill. The model is consistent with large income differences between countries, the predominance of small firms in poor countries, and the positive correlation between the wages of workers in different occupations within enterprises. Imperfect observability of skill leads to imperfect matching and thus to spillovers, strategic complementarity, and multiple equilibria in education. * I am grateful to Roland Benabou, Kala Krishna, Eric Maskin, Paul Romer, Sherwin Rosen, Xavier Sala-i-Martin, Philippe Weil, many former classmates at Harvard, and especially Robert Barro for comments and suggestions. The National Science Foundation provided financial support during the period this paper was written. This content is only available as a PDF. © 1993 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology
TI - The O-Ring Theory of Economic Development
JF - The Quarterly Journal of Economics
DO - 10.2307/2118400
DA - 1993-08-01
UR - https://www.deepdyve.com/lp/oxford-university-press/the-o-ring-theory-of-economic-development-0wUJcdlRui
SP - 551
VL - 108
IS - 3
DP - DeepDyve
ER -