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Endogenous Income Distribution with Product Obsolescence

  • Lee, Seong-Hoon
  • Goo, Young-Wan
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    Wage inequality in U. S. and UK has increased over the past 25 years. Paradoxically, skilled labor supply has also increased in both countries. This paper develops the dynamic general equilibrium model of product innovation with product obsolescence. We develop a model to provide an explanation of inequality phenomena between skilled and unskilled labor by the channel of innovation and market structure. This paper builds on the dynamic general equilibrium model of product innovation and incorporates overhead cost of the production of intermediate goods to capture endogenous growth rate of innovation, hazard rate, product life cycle and inequality.

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    Article provided by Hitotsubashi University in its journal Hitotsubashi Journal of Economics.

    Volume (Year): 49 (2008)
    Issue (Month): 2 (December)
    Pages: 75-90

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    Handle: RePEc:hit:hitjec:v:49:y:2008:i:2:p:75-90
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    1. Matthew Higgins & Jeffrey G. Williamson, 1999. "Explaining inequality the world round: cohort size, Kuznets curves, and openness," Staff Reports 79, Federal Reserve Bank of New York.
    2. Grossman, G.M. & Helpman, E., 1989. "Endogemour Product Cycles," Papers 10-89, Tel Aviv.
    3. Macdonald, G.M., 1988. "Competitive Diffusion," University of Chicago - Economics Research Center 88-10, Chicago - Economics Research Center.
    4. Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, vol. 57(2), pages 259-287.
    5. Glenn C. Loury, 1976. "Market Structure and Innovation," Discussion Papers 256, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    6. Grossman, G.M. & Helpman, E., 1988. "Comparative Advantage And Long-Run Growth," Papers 39-88, Tel Aviv.
    7. Bourguignon, F. & Morrisson, C., 1995. "Inequality and Development: The Role of Dualism," DELTA Working Papers 95-32, DELTA (Ecole normale supérieure).
    8. 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.
    9. Boyan Jovanovic & Glenn MacDonald, 1993. "Competitive Diffusion," NBER Working Papers 4463, National Bureau of Economic Research, Inc.
    10. Galor, Oded & Tsiddon, Daniel, 1996. "Technological Progress, Mobility, and Economic Growth," CEPR Discussion Papers 1413, C.E.P.R. Discussion Papers.
    11. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
    12. Segerstrom, P.S., 1990. "Innovation, Imitation And Economic Growth," Papers 8818, Michigan State - Econometrics and Economic Theory.
    13. Boyan Jovanovic & Glenn MacDonald, 1993. "The Life-Cycle of a Competitive Industry," NBER Working Papers 4441, National Bureau of Economic Research, Inc.
    14. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
    15. Lai, Edwin L-C, 1998. " Schumpeterian Growth with Gradual Product Obsolescence," Journal of Economic Growth, Springer, vol. 3(1), pages 81-103, March.
    16. Krugman, Paul, 1979. "A Model of Innovation, Technology Transfer, and the World Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 253-66, April.
    17. Klepper, Steven, 1996. "Entry, Exit, Growth, and Innovation over the Product Life Cycle," American Economic Review, American Economic Association, vol. 86(3), pages 562-83, June.
    18. Aghion, P. & Howitt, P., 1990. "A Model Of Growth Through Creative Destruction," DELTA Working Papers 90-12, DELTA (Ecole normale supérieure).
    19. Grossman, G.M. & Helpman, E., 1989. "Endogenous Prduct Cycles," Papers 144, Princeton, Woodrow Wilson School - Public and International Affairs.
    20. repec:cup:cbooks:9780521293853 is not listed on IDEAS
    21. Shaked, Avner & Sutton, John, 1987. "Product Differentiation and Industrial Structure," Journal of Industrial Economics, Wiley Blackwell, vol. 36(2), pages 131-46, December.
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