The Division of Labor, Coordination Costs and the Growth of Government
Lewis S. Davis
SUNY-Oswego Economics Department
Working Paper 1998-03
Visiting Assistant Professor of Economics
Department of Economics
SUNY Oswego
7060 State Route 104
Oswego, NY 13126
Phone- 315-341-3484
FAX- 315-341-5444
ldavis@Oswego.edu
Abstract
This paper develops a dynamic, general equilibrium
model of specialization-driven growth in which the private cost of coordination
among specialists is a function of public expenditures on physical and
institutional infrastructure. Growth is characterized by endogenous increases
in labor specialization, capital per worker, market size, private coordination
costs and government's share of total spending. By considering the role
of government in facilitating an advanced division of labor, the model
provides an economic explanation for the secular rise of government's
share of output.
JEL Classifications- H100, O300, O410
Inframarginal
Economics Society
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