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Technology, Entrepreneurship, And Inequality

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Author Info
Alfonso Gambardella
David Ulph
Abstract

This paper links the rise of new industries populated by skill-intensive companies, and the divergence in labour incomes between skills. Our model explains inequality by the fact that as the skilled workers move towards new Silicon-Valley type firms, the reduced complementarity between skilled and unskilled workers in the traditional manufacturing sectors lessens the productivity of the latter. In addition, knowledge externalities in the modern sector produce two equilibria in which either the modern sector dominates (and inequality between skills is high), or manufacturing dominates (inequality is low). We provide suggestive evidence consistent with our model.

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Paper provided by Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 2002/06.

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Date of creation: 10 Dec 2002
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Handle: RePEc:ssa:lemwps:2002/06

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  5. Daron Acemoglu, 1999. "Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence," American Economic Review, American Economic Association, vol. 89(5), pages 1259-1278, December. [Downloadable!] (restricted)
    Other versions:
  6. Philippe Aghion & Eve Caroli & Cecilia Garcia-Penalosa, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December. [Downloadable!] (restricted)
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  7. Stephen Machin & John Van Reenen, 1998. "Technology And Changes In Skill Structure: Evidence From Seven Oecd Countries," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1215-1244, November. [Downloadable!] (restricted)
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  8. Andrew B. Bernard & J. Bradford Jensen, 1998. "Understanding Increasing and Decreasing Wage Inequality," NBER Working Papers 6571, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Bresnahan, Timothy F, 1999. "Computerisation and Wage Dispersion: An Analytical Reinterpretation," Economic Journal, Royal Economic Society, vol. 109(456), pages F390-415, June. [Downloadable!] (restricted)
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  10. Martin Feldstein, 1998. "Income Inequality and Poverty," NBER Working Papers 6770, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Eve Caroli & John Van Reenen, 2001. "Skill-Biased Organizational Change? Evidence From A Panel Of British And French Establishments," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1449-1492, November. [Downloadable!] (restricted)
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  12. Langlois, Richard N. & Robertson, Paul L., 1992. "Networks and innovation in a modular system: Lessons from the microcomputer and stereo component industries," Research Policy, Elsevier, vol. 21(4), pages 297-313, August. [Downloadable!] (restricted)
  13. Daron Acemoglu, 2000. "Technical Change, Inequality, and the Labor Market," NBER Working Papers 7800, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  14. Ashish Arora & Andrea Fosfuri & Alfonso Gambardella, 2004. "Markets for Technology: The Economics of Innovation and Corporate Strategy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511819, December.
  15. Paola Casavola & André Gavosto & Paolo Sestito, 1996. "Technical Progres and Wage Dispersion in Italy: Evidence from Firm's Data," Annales d'Economie et de Statistique, ADRES, issue 41-42, pages 17, Janvier-J. [Downloadable!]
  16. 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. [Downloadable!] (restricted)
  17. Berman, Eli & Bound, John & Machin, Stephen, 1997. "Implications of Skill-Biased Technological Change: International Evidence," Working Paper Series 486, Research Institute of Industrial Economics.
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  18. Gottschalk, Peter, 1997. "Inequality, Income Growth, and Mobility: The Basic Facts," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 21-40, Spring. [Downloadable!] (restricted)
  19. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June. [Downloadable!] (restricted)
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