Wage inequality and welfare effects of domestic technological progress: a dual economy approach
This paper shows that technological progress caused by a domestic high-tech firm always increases the skilled-unskilled wage inequality, using a two-sector, two-labor model. Also, we derive a sufficient condition for the technological progress to be effective in increasing domestic welfare. In the Cobb Douglas production function case, if the equilibrium relative wage is greater than a threshold level, domestic welfare unambiguously increases in response to the technological progress. Moreover, we also provide some policy implications of our results, in the context of developing countries.
Volume (Year): 15 (2007)
Issue (Month): 22 ()
|Contact details of provider:|| |
When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-07o10034. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John P. Conley)
If references are entirely missing, you can add them using this form.