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Effects Of International Diffusion Of A General Purpose Technology On Wage Inequality

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    This paper studies the effects of the diffusion of a General Purpose Technology (GPT) that spreads first within the developed North country of its origin, and then to a developing South country. In the developed general equilibrium growth model, each final good can be produced by one of two technologies. Each technology is characterized by a specific labor complemented by a specific set of intermediate goods, which are enhanced periodically by Schumpeterian R&D activities. When quality reaches a threshold level, a GPT arises in one of the technologies and spreads first to the other technology within the North. Then, it propagates to the South, following a similar sequence. Since diffusion is not even, neither intra- nor inter-country, the GPT produces successive changes in the direction of technological knowledge and in inter- and intra-country wage inequality. Through this mechanism the different observed paths of wage inequality can be accommodated.

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

    Volume (Year): 54 (2013)
    Issue (Month): 2 (December)
    Pages: 203-220

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    Handle: RePEc:hit:hitjec:v:54:y:2013:i:2:p:203-220
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    1. David Autor & Frank Levy & Richard Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
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