Knowledge-based Hierarchies: Using Organizations to Understand the Economy

NBER Working Paper No. 20607

Issued in October 2014

NBER Program(s):Economic Fluctuations and Growth, Industrial Organization, International Trade and Investment, Labor Studies, Productivity, Innovation, and Entrepreneurship



We argue that incorporating the decision of how to organize the acquisition, use, and communication of knowledge into economic models is essential to understand a wide variety of economic phenomena. We survey the literature that has used knowledge-based hierarchies to study issues like the evolution of wage inequality, the growth and productivity of firms, economic development, the gains from international trade, as well as offshoring and the formation of international production teams, among many others. We also review the nascent empirical literature that has, so far, confirmed the importance of organizational decisions and many of its more salient implications.

Acknowledgments and Disclosures

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Document Object Identifier (DOI): 10.3386/w20607

Published: Luis Garicano & Esteban Rossi-Hansberg, 2015. "Knowledge-Based Hierarchies: Using Organizations to Understand the Economy," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 1-30, 08. citation courtesy of

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