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Endogenous Technological Change and Wage Inequality

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  • Huw Lloyd-Ellis

Abstract

Although microeconomic studies find a positive relationship between R&D and skill premia, much of the recent rise in U.S. wage inequality was accompanied by slowing labor-productivity growth and relatively slow introduction of new technologies. These conflicting observations are consistent with the effects of a skewed distribution of 'absorptive capacities'--the rate at which technology-specific skills can be acquired--in a model of endogenous technological change. The framework is used to assess whether the productivity slowdown and the rise in wage inequality can be jointly accounted for by the contemporaneous decline in the growth rate of labor quality.

Suggested Citation

  • Huw Lloyd-Ellis, 1999. "Endogenous Technological Change and Wage Inequality," American Economic Review, American Economic Association, vol. 89(1), pages 47-77, March.
  • Handle: RePEc:aea:aecrev:v:89:y:1999:i:1:p:47-77
    Note: DOI: 10.1257/aer.89.1.47
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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