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How Powerful Are Network Effects? A Skill-Biased Technological Change Approach

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  • Afonso, Oscar
  • Magalhäes, Manuela

Abstract

Even for the standard skill-biased technological change (SBTC) literature, the generic rise in the skill premium in the face of the relative increase in skilled workers since the 1980s seems a little puzzling. We develop a general equilibrium SBTC growth model that allows the dominance of either the price channel or the market-size channel mechanism through which network spillovers affect the technological-knowledge bias and, thus, the paths of intra-country wage inequality. The proposed mechanisms can accommodate facts not explained by the earlier literature.

Suggested Citation

  • Afonso, Oscar & Magalhäes, Manuela, 2020. "How Powerful Are Network Effects? A Skill-Biased Technological Change Approach," Macroeconomic Dynamics, Cambridge University Press, vol. 24(4), pages 882-919, June.
    • Handle: RePEc:cup:macdyn:v:24:y:2020:i:4:p:882-919_5
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    Cited by:

    1. Afonso, Oscar & Bandeira, Ana Maria & Lima, Pedro G., 2022. "Growth and welfare effects of corruption penalties," Economic Systems, Elsevier, vol. 46(3).
    2. Oscar Afonso & Pedro G. Lima, 2023. "Effects of monetary policy on the skill premium and the growth rate in a directed technical change model with heterogeneous cash‐in‐advance constraints," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 4020-4036, October.
    3. Afonso, Oscar & Pinho, Mafalda, 2022. "How to reverse a negative asymmetric labor productivity shock in the European Union? A directed technical change analysis with fiscal and monetary policies," Mathematical Social Sciences, Elsevier, vol. 116(C), pages 47-67.
    4. Afonso, Oscar, 2023. "Fiscal and monetary effects on environmental quality, growth, and welfare," Research in Economics, Elsevier, vol. 77(1), pages 202-219.
    5. Oscar Afonso, 2023. "Losers and losses of COVID-19: a directed technical change analysis with fiscal and monetary policies," Economic Change and Restructuring, Springer, vol. 56(3), pages 1777-1821, June.

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