The Determinants of Long-Run Inequality
AbstractI explore the effect of skill-biased technological change on long-run inequality using a theoretical model where the supply of skilled and unskilled workers, the cost of education, and credit rationing are endogenous. I show that the existence of unequal steady states does not depend on the degree of technological skill bias, but on the credit market, the cost of education, altruism, and the overall growth rate of the economy. However, when unequal steady states exist, economies with a higher technological skill bias have a greater long-run inequality. Therefore, skill-bias technological change is a second-order determinant of long-run inequality: a higher technological skill bias is associated with greater long-run inequality only if long-run inequality exists; the existence of long-run inequality does not depend on skill bias.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, Central European University in its series CEU Working Papers with number 2012_10.
Date of creation: 20 Mar 2012
Date of revision: 20 Mar 2012
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-09 (All new papers)
- NEP-DGE-2012-09-09 (Dynamic General Equilibrium)
- NEP-LAB-2012-09-09 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
- Greenwood, J. & Jovanovic, B., 1990.
"Financial Development, Growth, And The Distribution Of Income,"
University of Western Ontario, The Centre for the Study of International Economic Relations Working Papers
9002, University of Western Ontario, The Centre for the Study of International Economic Relations.
- Greenwood, Jeremy & Jovanovic, Boyan, 1990. "Financial Development, Growth, and the Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1076-1107, October.
- Jeremy Greenwood & Boyan Jovanovic, 1989. "Financial Development, Growth, and the Distribution of Income," NBER Working Papers 3189, National Bureau of Economic Research, Inc.
- Greenwood, J. & Jovanovic, B., 1988. "Financial Development, Growth, And The Distribution Of Income," RCER Working Papers 131, University of Rochester - Center for Economic Research (RCER).
- Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
- Rigolini, Jamele, 2004. "Education technologies, wages and technological progress," Journal of Development Economics, Elsevier, vol. 75(1), pages 55-77, October.
- Dilip Mokherjee & Stefan Napel, 2006.
"Intergenerational Mobility and Macroeconomic History Dependence,"
1, Aboa Centre for Economics.
- Mookherjee, Dilip & Napel, Stefan, 2007. "Intergenerational mobility and macroeconomic history dependence," Journal of Economic Theory, Elsevier, vol. 137(1), pages 49-78, November.
- Galor, Oded & Zeira, Joseph, 1988.
"Income Distribution and Macroeconomics,"
51644, University Library of Munich, Germany, revised 01 Sep 1989.
- Fatih Guvenen & Burhanettin Kuruscu, 2007.
"Understanding the Evolution of the U.S. Wage Distribution: A Theoretical Analysis,"
NBER Working Papers
13096, National Bureau of Economic Research, Inc.
- Fatih Guvenen & Burhanettin Kuruscu, 2012. "Understanding The Evolution Of The Us Wage Distribution: A Theoretical Analysis," Journal of the European Economic Association, European Economic Association, vol. 10(3), pages 482-517, 05.
- Mookherjee, Dilip & Ray, Debraj, 2002.
57, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
- Dilip Mookherjee & Debraj Ray, 2000. "Persistent Inequality," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-108, Boston University - Department of Economics, revised Oct 2002.
- James J. Heckman & Lance Lochner & Christopher Taber, 1998.
"Explaining Rising Wage Inequality: Explorations with a Dynamic General Equilibrium Model of Labor Earnings with Heterogeneous Agents,"
NBER Working Papers
6384, National Bureau of Economic Research, Inc.
- James Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explanations With A Dynamic General Equilibrium Model of Labor Earnings With Heterogeneous Agents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 1-58, January.
- Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-67, June.
- Kiminori Matsuyama, 1998.
1238, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Piketty, Thomas, 1997. "The Dynamics of the Wealth Distribution and the Interest Rate with Credit Rationing," Review of Economic Studies, Wiley Blackwell, vol. 64(2), pages 173-89, April.
- Chiara Binelli, 2009. "The Demand-Supply-Demand Twist: How the Wage Structure Got More Convex," Working Paper Series 48_09, The Rimini Centre for Economic Analysis, revised Jan 2009.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anita Apor).
If references are entirely missing, you can add them using this form.