knowledge sector is bounded, as productivity increases, the economy moves from a "Solovian zone" where wages increase with … productivity, to a "Marxian" zone where the paradoxically decline with productivity. This is because as consumption of a given good … more unevenly distributed then productivity, technical progress always increases inequality. Redistribution from profits to …

This paper estimates a dynamic general equilibrium model of entry, exit, and endogenous productivity growth …. Productivity is endogenous both at the industry level (firms enter and exit) and at the firm level (firms invest in productivity …-enhancing activities). The focus of the paper is on two activities that make productivity-enhancing investments more attractive, namely …