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Catching-up, structural transformation, and inequality: industry-level evidence from Asia

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  • Bruno Martorano
  • Donghyun Park
  • Marco Sanfilippo

Abstract

This article empirically investigates the effect of structural transformation on wage inequality in Asia, using industry-level data for three skill groups of workers. While structural transformation, associated with technological progress, productivity catching-up, and capital deepening, has contributed to Asia’s sustained growth, its effect on income inequality remains uncertain. Our results show that the process of economic transformation has exacerbated inequality in the region by increasing the relative share of high-skilled workers in total compensation. This is mainly due to a shift toward more productive—and more intensive in the use of skilled labor—activities both within and between industries. However, we also find that policy responses, especially investments in education, mitigate the increase in inequality.

Suggested Citation

  • Bruno Martorano & Donghyun Park & Marco Sanfilippo, 2017. "Catching-up, structural transformation, and inequality: industry-level evidence from Asia," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 26(4), pages 555-570.
    • Handle: RePEc:oup:indcch:v:26:y:2017:i:4:p:555-570.
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    Cited by:

    1. Thanos Fragkandreas, 2022. "Three Decades of Research on Innovation and Inequality: Causal Scenarios, Explanatory Factors, and Suggestions," Working Papers 60, Birkbeck Centre for Innovation Management Research, revised Feb 2022.
    2. Haraguchi, Nobuya & Martorano, Bruno & Sanfilippo, Marco, 2019. "What factors drive successful industrialization? Evidence and implications for developing countries," Structural Change and Economic Dynamics, Elsevier, vol. 49(C), pages 266-276.

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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