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Defensive Innovations

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Author Info
Koeniger, Winfried () (IZA, Bonn)

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Abstract

Defensive innovations in developed countries can explain the empirical phenomenon that openness towards trade with less-developed countries does not necessarily induce a substantial increase in the wage differential and trade volumes. Building on step-by-step innovations as introduced by Aghion et al. (2001), we show that defensive innovations can result from private incentives. In particular, minimum wages can induce defensive innovations which then redistribute income away from workers. Suggestive empirical evidence is consistent with the implications of defensive innovations for wage differentials, trade volumes and the sectorial composition within and across OECD countries.

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File URL: ftp://repec.iza.org/RePEc/Discussionpaper/dp454.pdf
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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 454.

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Length: 36 pages
Date of creation: Mar 2002
Date of revision:
Handle: RePEc:iza:izadps:dp454

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Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
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Web page: http://www.iza.org

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Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
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Related research
Keywords: Step-by-step innovations openness minimum wage

Find related papers by JEL classification:
F1 - International Economics - - Trade
F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
O3 - Economic Development, Technological Change, and Growth - - Technological Change

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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.:
  1. Hellwig, Martin & Irmen, Andreas, 1999. "Wage Growth, Productivity Growth, and the Evolution of Employment," Sonderforschungsbereich 504 Publications 99-86, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
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  2. Acemoglu, Daron & Aghion, Philippe & Violante, Giovanni L., 2001. "Deunionization, technical change and inequality," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 55(1), pages 229-264, December. [Downloadable!] (restricted)
    Other versions:
  3. Thoenig, Mathias & Verdier, Thierry, 2000. "Trade Induced Technical Bias And Wage Inequalities: A Theory Of Defensive Innovations," CEPR Discussion Papers 2401, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. Redding, Stephen J, 1999. "The Dynamics of International Specialization," CEPR Discussion Papers 2287, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  5. Daron Acemoglu & Fabrizio Zilibotti, 2001. "Productivity Differences," The Quarterly Journal of Economics, MIT Press, vol. 116(2), pages 563-606, May. [Downloadable!] (restricted)
    Other versions:
  6. Sapir, André, 2000. "Who is Afraid of Globalization? The Challenge of Domestic Adjustment in Europe and America," CEPR Discussion Papers 2595, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  7. Nickell, Stephen & Bell, Brian, 1996. "Changes in the Distribution of Wages and Unemployment in OECD Countries," American Economic Review, American Economic Association, vol. 86(2), pages 302-08, May. [Downloadable!] (restricted)
  8. Helmut Bester & Emmanuel Petrakis, . "Wages and Productivity Growth in a Dynamic Monopoly," Papers 012, Departmental Working Papers. [Downloadable!]
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  9. Nickell, Stephen & Redding, Stephen J & Swaffield, Joanna K, 2001. "Educational Attainment, Labour Market Institutions and the Structure of Production," CEPR Discussion Papers 3068, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  10. Koeniger, Winfried, 2001. "Trade, Labor Market Rigidities, and Government-Financed Technological Change," IZA Discussion Papers 241, Institute for the Study of Labor (IZA). [Downloadable!]
  11. Acemoglu, Daron, 2002. "Directed Technical Change," Review of Economic Studies, Blackwell Publishing, vol. 69(4), pages 781-809, October.
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  12. Daron Acemoglu & Jorn-Steffen Pischke, 1999. "The Structure of Wages and Investment in General Training," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 539-572, June. [Downloadable!] (restricted)
    Other versions:
  13. Aghion, Philippe, et al, 2001. "Competition, Imitation and Growth with Step-by-Step Innovation," Review of Economic Studies, Blackwell Publishing, vol. 68(3), pages 467-92, July.
  14. James Harrigan, 1996. "Technology, Factor Supplies and International Specialization: Estimating the Neoclassical Model," NBER Working Papers 5722, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  15. Aghion, Philippe & Harris, Christopher & Vickers, John, 1997. "Competition and growth with step-by-step innovation: An example," European Economic Review, Elsevier, vol. 41(3-5), pages 771-782, April. [Downloadable!] (restricted)
  16. James E. Anderson, 1999. "Why Do Nations Trade (So Little)?," Boston College Working Papers in Economics 428, Boston College Department of Economics. [Downloadable!]
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