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Concerning Inequality, Technology Adoption, and Structural Change

  • Radhika Lahiri


  • Shyama Ratnasiri

Empirical evidence suggests that there has been a divergence over time in income distributions across countries and within countries. In this paper we study a simple dynamic general equilibrium model of technology adoption which is consistent with these stylized facts. In our model, growth is endogenous, and agents are assumed to be heterogeneous in their initial holdings of wealth and capital. We find that in the presence of barriers or costs associated with the adoption of more productive technologies, inequalities in wealth and income may increase over time tending to delay the convergence in international income differences. The model is also capable of explaining the observed diversity in the growth pattern of transitional economies. According to the model, this diversity may be the result of variability in adoption costs, or the relative position of a transitional economy in the world income distribution.

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Article provided by International Atlantic Economic Society in its journal International Advances in Economic Research.

Volume (Year): 13 (2007)
Issue (Month): 4 (November)
Pages: 527-528

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Handle: RePEc:kap:iaecre:v:13:y:2007:i:4:p:527-528
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  1. Ryo Horii & Ryoji Ohdoi & Kazuhiro Yamamoto, 2005. "Finance, Technology and Inequality in Economic Development," Discussion Papers in Economics and Business 05-08-Rev, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP), revised Aug 2005.
  2. Aubhik Khan & B. Ravikumar, 1998. "Costly Technology Adoption and Capital Accumulation," Development and Comp Systems 9802001, EconWPA.
  3. Tullio Jappelli & Luigi Pistaferri, 2000. "The dynamics of household wealth accumulation in Italy," Fiscal Studies, Institute for Fiscal Studies, vol. 21(2), pages 269-295, June.
  4. Krusell, P. & Rios-Rull, J.V., 1993. "Vested Interests in a Positive Theory of Stagnation and Growth," Papers 547, Stockholm - International Economic Studies.
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