O Ring Model Of Economic Development

I also rewatched my video on this paper from tyler s and my online class development economics.

O ring model of economic development.

Write a cobb douglas utility function where instead of labor entering as a lump of homogenous efficiency units n units of labor for n tasks must be supplied by n individuals. The theory was inspired by analysis of the 1986 challenger shuttle disaster where the failure of a single o ring led to catastrophic results. Michael kremer formulated the o ring theory in 1993. The model is consistent with large income differences between countries the predominance of small firms in poor countries and the positive correlation between the wages of workers in different occupations within enterprises.

Also known as the o ring model of economic development this refers to the theory that even the smallest components of a complex production process must be performed properly if the end product of. The latest issue of the journal of economic behavior and organization has a new paper by garett jones ungated version here on the o ring theory of economic development. His article the o ring theory of economic development published in the quarterly journal of economics presents a production function in which production consists of many tasks all of which must be successfully completed for the product to have full value. Michael kremer s nobel prize with duflo and banerjee reminded me of his important paper the o ring theory of development.

This was from our powerpoint and ipad days so there are no fancy graphics but the video holds up. Its been floating around as a working paper for a few years so its nice to see it get a home. The basic idea is simple. Kremer 1993 the o ring theory is unquestionably one of the most influential papers in applied theory of the past 20 years.