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Effects of Learning-by-doing, technology-adoption costs and wage inequality

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Author Info

  • Rui Leite

    ()
    (Faculdade de Economia, Universidade do Porto, Portugal)

  • Óscar Afonso

    ()
    (CEMPRE and Faculdade de Economia, Universidade do Porto, Portugal)

Abstract

In the dominant literature, the technological-knowledge bias that drives wage inequality is determined by the market-size channel. We develop an endogenous growth model with two technologies in which: a specific quality of labour, low or high-skilled, is combined with a specific set of quality-adjusted intermediate goods; the market-size channel is practically removed; adoption costs and learning-by-doing are linked with labour endowments. By solving transitional dynamics numerically, we show that changes in the supply of labour affect learning-by-doing and technology-adoption costs, which, in turn, influence the technological-knowledge bias and thus wage inequality. The proposed mechanisms can accommodate facts not explained by the previous literature.

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Bibliographic Info

Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 272.

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Length: 22 pages
Date of creation: Apr 2008
Date of revision:
Handle: RePEc:por:fepwps:272

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Keywords: Learning-by-doing; Adoption costs; Technological-knowledge bias; Wage inequality; Numerical simulations;

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