Entrepreneurship, Management Services And Economic Growth

The authors set out to model the joint production of entrepreneurs and workers assuming that the former contribute to the output of the firm by making entrepreneurial decisions (with increasing returns), and managing the productive resources (with decreasing returns). The model explains the equilibrium output of the representative firm and the equilibrium share of entrepreneurs in the working population, as a function of the quality of the entrepreneur and of the elasticity of output to the entrepreneur's management services.