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The Technology Cycle and Inequality

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  • Boyan Jovanovic

Abstract

Motivated by the observed rise in the trade of technology, I analyse how technology would spread in a frictionless market. In such a world, low-skilled agents prefer to use old technology because it costs less; their skills do not justify the use of frontier technology. The model generates a technology-life cycle of somewhere between 68 and 124 years and per-capita income differential factors between 2.3 and 4.5. The model matches fairly well the cross-section relation between a country's income per capita and the average age of the technologies that its residents use. It is also consistent with aspects of the observed positive relation between income and imports of technology. Copyright , Wiley-Blackwell.

Suggested Citation

  • Boyan Jovanovic, 2009. "The Technology Cycle and Inequality," Review of Economic Studies, Oxford University Press, vol. 76(2), pages 707-729.
  • Handle: RePEc:oup:restud:v:76:y:2009:i:2:p:707-729
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    File URL: http://hdl.handle.net/10.1111/j.1467-937X.2009.00532.x
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    Citations

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    Cited by:

    1. Been-Lon Chen & Jie-Ping Mo & Ping Wang, 2012. "Two-sided micro-matching with technical progress," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(2), pages 445-462, June.
    2. Acemoglu, Daron & Gancia, Gino & Zilibotti, Fabrizio, 2012. "Competing engines of growth: Innovation and standardization," Journal of Economic Theory, Elsevier, vol. 147(2), pages 570-601.3.
    3. repec:eee:jmacro:v:53:y:2017:i:c:p:191-206 is not listed on IDEAS
    4. Diego Comin & Bart Hobijn & Emilie Rovito, 2008. "Technology usage lags," Journal of Economic Growth, Springer, vol. 13(4), pages 237-256, December.
    5. Katsuya Takii & Ryuichi Tanaka, 2013. "On the role of job assignment in a comparison of education systems," Canadian Journal of Economics, Canadian Economics Association, vol. 46(1), pages 180-207, February.
    6. Dominik Paprotny, 2016. "Measuring Central and Eastern Europe’s Socio-Economic Development Using Time Lags," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(3), pages 939-957, July.
    7. repec:eee:eecrev:v:96:y:2017:i:c:p:18-37 is not listed on IDEAS
    8. Jovanovic, Boyan & Yatsenko, Yuri, 2012. "Investment in vintage capital," Journal of Economic Theory, Elsevier, vol. 147(2), pages 551-569.
    9. repec:spr:joptap:v:163:y:2014:i:1:d:10.1007_s10957-013-0453-y is not listed on IDEAS
    10. Diego A. Comin & Bart Hobijn & Emilie Rovito, 2006. "World Technology Usage Lags," NBER Working Papers 12677, National Bureau of Economic Research, Inc.
    11. Gamboa, Franklin & Maldonado, Wilfredo Leiva, 2014. "Feasibility and optimality of the initial capital stock in the Ramsey vintage capital model," Journal of Mathematical Economics, Elsevier, vol. 52(C), pages 40-45.
    12. Robert Plant & Manuel S. Santos & Tarek Sayed, 2017. "Computerization, Composition of Employment, and Structure of Wages," Working Papers 2017-09, University of Miami, Department of Economics.

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