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Technological change, rent and income inequalities: A Schumpeterian approach

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  • Antonelli, Cristiano
  • Gehringer, Agnieszka

Abstract

Increasing levels of income inequality have recently attracted much attention. The literature has concentrated on the hypothesis that increasing levels of income inequality are the cause of slow growth and social unbalances. This paper contributes to exploring an alternative hypothesis according to which increasing levels of income inequality are the consequence, rather than the cause, of slow growth and more specifically of the slowing pace of technological change. The paper articulates the Schumpeterian hypothesis that the rate of technological change exerts a significant influence in reducing income distribution. Due to the powerful effects of creative destruction, the rate of technological change engenders a reduction in wealth and rent inequalities that are highly skewed and, consequently, limits income inequality. We test this hypothesis in an empirical exercise by implementing quantile regressions on a large dataset of advanced and industrializing economies. The inequality diminishing effect of technological change holds along the entire income inequality distribution, but exhibits larger effects in countries where the concentration of wealth and, consequently, income asymmetries are stronger. These results have novel welfare implications and suggest some crucial insights for economic policy analysis.

Suggested Citation

  • Antonelli, Cristiano & Gehringer, Agnieszka, 2017. "Technological change, rent and income inequalities: A Schumpeterian approach," Technological Forecasting and Social Change, Elsevier, vol. 115(C), pages 85-98.
  • Handle: RePEc:eee:tefoso:v:115:y:2017:i:c:p:85-98
    DOI: 10.1016/j.techfore.2016.09.023
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    Cited by:

    1. Abdol Majid Saadat Nezhad & Tahmoures Sohrabi & Nasrollah Shadnoosh & Abbas Toloie Eshlaghy, 2017. "A New Approach to Challenges of Venture Capital in Financing the Industrial Clusters through Cooperative Models and Venture Funds in Iran," International Journal of Economics and Financial Issues, Econjournals, vol. 7(6), pages 111-119.
    2. Antonelli, Cristiano & Scellato, Giuseppe, 2019. "Wage inequality and directed technological change: Implications for income distribution," Technological Forecasting and Social Change, Elsevier, vol. 141(C), pages 59-65.
    3. Benos, Nikos & Tsiachtsiras, Georgios, 2019. "Innovation and Income Inequality: World Evidence," MPRA Paper 92050, University Library of Munich, Germany.

    More about this item

    Keywords

    Economic growth; Rate of technological change; Wealth inequality; Rent inequality; Income inequality;

    JEL classification:

    • N30 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative
    • 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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