Tommaso Ciarli - André Lorentz - Maria Savona
Structural change of production and consumption: a micro to macro approach to economic growth

Abstract:The aim of the paper is to analyse the relationship between structural changes in the organisation and composition of production, changes in income distribution, and the evolution of consumption, as affecting patterns of economic growth. We provide an (agent-based) micro-foundation to the link between structural change and growth by accounting for (i) firm-level organisational and technological changes, (ii) their impact on the structure of earnings and income of workers-consumers, and (iii) the consequent changes in consumption patterns. The model articulates the links between innovation and production on the supply side, and the endogenous evolution of income distribution and consumption `needs' on the demand side. We let these links interact to identify, via numerical simulations, different scenarios of changes in the composition of economies, and their aggregate growth, as emerging properties of evolutionary micro-dynamics of innovation, functional composition of employment, income distribution and consumption patterns.

JEL:O12 J31 L23 D11.
Keywords: Structural change; consumption; growth; earnings distribution.



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