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Population Growth, Technological Adoption, and Economic Outcomes in the Information Era

  • Paul Beaudry

    (University of British Columbia)

  • David A. Green

    (University of British Columbia)

In this paper we argue that population growth, through its interaction with recent technological and organizational developments, may account for many cross-country differences in economic outcomes observed among industrialized countries over the past 20 years. In particular, our model illustrates how a large decrease in the price of information technology can create a comparative advantage for high population growth economies to jump ahead in the adoption of computer- and skill-intensive modes of production. They do this as a means of countering their relative scarcity of physical capital. The predictions of the model are that, over the span of the information revolution, industrial countries with higher population growth rates will experience a more pronounced adoption of new technology, a better performance in terms of increased employment rates, a poorer performance in terms of wage growth for less skilled workers, a larger increase in the service sector, and a larger increase in the returns to education. We provide preliminary evidence in support of the theory based on an examination of broad wage movements, employment changes, and computer adoption patterns for a set of OECD countries. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1006/redy.2002.0189
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 5 (2002)
Issue (Month): 4 (October)
Pages: 749-774

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Handle: RePEc:red:issued:v:5:y:2002:i:4:p:749-774
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  1. Per Krusell & Lee E. Ohanian & Jose-Victor Rios-Rull & Giovanni L. Violante, 1997. "Capital-skill complementarity and inequality: a macroeconomic analysis," Staff Report 239, Federal Reserve Bank of Minneapolis.
  2. Acemoglu, D., 1996. "Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence," Working papers 96-15, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 1999. "Information Technology, Workplace Organization and the Demand for Skilled Labor: Firm-Level Evidence," NBER Working Papers 7136, National Bureau of Economic Research, Inc.
  4. Joseph Zeira, 1998. "Workers, Machines, And Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1091-1117, November.
  5. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
  6. Paul Beaudry & David Green, 1998. "What is Driving US and Canadian Wages: Exogenous Technical Change or Endogenous Choice of Technique?," NBER Working Papers 6853, National Bureau of Economic Research, Inc.
  7. Francesco Caselli, 1999. "Technological Revolutions," American Economic Review, American Economic Association, vol. 89(1), pages 78-102, March.
  8. Paul Beaudry & David Green, 2001. "Population Growth, Technological Adoption and Economic Outcomes: A Theory of Cross-Country Differences for the Information Era," NBER Working Papers 8149, National Bureau of Economic Research, Inc.
  9. Claudia Goldin & Lawrence F. Katz, 1996. "The Origins of Technology-Skill Complementarity," NBER Working Papers 5657, National Bureau of Economic Research, Inc.
  10. Paul Beaudry & David Green, 2000. "The Changing Structure of Wages in the US and Germany: What Explains the Differences?," NBER Working Papers 7697, National Bureau of Economic Research, Inc.
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