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Endogenous Income Distribution with Product Obsolescence

Author

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  • Lee, Seong-Hoon
  • Goo, Young-Wan

Abstract

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.

Suggested Citation

  • Lee, Seong-Hoon & Goo, Young-Wan, 2008. "Endogenous Income Distribution with Product Obsolescence," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 49(2), pages 75-90, December.
    • Handle: RePEc:hit:hitjec:v:49:y:2008:i:2:p:75-90
    DOI: 10.15057/16522
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    References listed on IDEAS

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    More about this item

    Keywords

    wage inequality; skilled and unskilled labor; product innovation; general equilibrium;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • D2 - Microeconomics - - Production and Organizations
    • D3 - Microeconomics - - Distribution

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