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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," The Review of Economic Studies, Review of Economic Studies Ltd, 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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    Cited by:

    1. Raphael Bergoeing & Norman V. Loayza & Facundo Piguillem, 2016. "The Whole is Greater than the Sum of Its Parts: Complementary Reforms to Address Microeconomic Distortions," The World Bank Economic Review, World Bank, vol. 30(2), pages 268-305.
    2. Alessandro Gavazza & Alessandro Lizzeri & Nikita Roketskiy, 2014. "A Quantitative Analysis of the Used-Car Market," American Economic Review, American Economic Association, vol. 104(11), pages 3668-3700, November.
    3. 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.
    4. Diego Comin & Bart Hobijn & Emilie Rovito, 2008. "Technology usage lags," Journal of Economic Growth, Springer, vol. 13(4), pages 237-256, December.
    5. Dominik Paprotny, 2021. "Convergence Between Developed and Developing Countries: A Centennial Perspective," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 153(1), pages 193-225, January.
    6. Yunfang Hu & Takuma Kunieda & Kazuo Nishimura & Ping Wang, 2023. "Flying or trapped?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 75(2), pages 341-388, February.
    7. Raouf Boucekkine & Natali Hritonenko & Yuri Yatsenko, 2014. "Optimal Investment in Heterogeneous Capital and Technology Under Restricted Natural Resource," Journal of Optimization Theory and Applications, Springer, vol. 163(1), pages 310-331, October.
    8. 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.
    9. Maria Minniti & Martin Andersson & Pontus Braunerhjelm & Frédéric Delmar & Annika Rickne & Karin Thorburn & Karl Wennberg & Mikael Stenkula, 2019. "Boyan Jovanovic: recipient of the 2019 Global Award for Entrepreneurship Research," Small Business Economics, Springer, vol. 53(3), pages 547-553, October.
    10. 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.
    11. He, Sicheng, 2022. "Growing through endogenous innovation cycles," Journal of Macroeconomics, Elsevier, vol. 71(C).
    12. Diego A. Comin & Bart Hobijn & Emilie Rovito, 2006. "World Technology Usage Lags," NBER Working Papers 12677, National Bureau of Economic Research, Inc.
    13. 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.
    14. Adel Ben Youssef & Mounir Dahmani, 2023. "Examining the Drivers of E-Commerce Adoption by Moroccan Firms: A Multi-Model Analysis," Post-Print hal-04374231, HAL.
    15. Ferraro, Domenico, 2017. "Volatility and slow technology diffusion," European Economic Review, Elsevier, vol. 96(C), pages 18-37.
    16. Jovanovic, Boyan & Yatsenko, Yuri, 2012. "Investment in vintage capital," Journal of Economic Theory, Elsevier, vol. 147(2), pages 551-569.
    17. Prithwiraj Choudhury & Evan Starr & Rajshree Agarwal, 2020. "Machine learning and human capital complementarities: Experimental evidence on bias mitigation," Strategic Management Journal, Wiley Blackwell, vol. 41(8), pages 1381-1411, August.
    18. Koenig, Michael & Rogers, Tim, 2018. "Endogenous Technology Cycles in Dynamic R&D Networks," CEPR Discussion Papers 13307, C.E.P.R. Discussion Papers.
    19. 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.
    20. Nancy Stokey, 2021. "Technology and Skill: Twin Engines of Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 40, pages 12-43, April.
    21. Sunaga, Miho, 2017. "Endogenous growth cycles with financial intermediaries and entrepreneurial innovation," Journal of Macroeconomics, Elsevier, vol. 53(C), pages 191-206.
    22. König, Michael D. & Rogers, Tim, 2023. "Endogenous technology cycles in dynamic R&D networks," European Economic Review, Elsevier, vol. 158(C).
    23. 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.
    24. Braunerhjelm, Pontus & Ding, Ding & Thulin, Per, 2020. "Labour market mobility, knowledge diffusion and innovation," European Economic Review, Elsevier, vol. 123(C).

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