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Product cycles, innovation and relative wages in European countries

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  • Alison Butler
  • Michael J. Dueker

Abstract

This paper attempts to bridge the gap between the theoretical literature examining how innovation affects income across countries and the empirical literature examining how relative wages within a country change over time. We test the hypothesis that the relative wage between workers in high-and low-technology industries within a country is a function of the rate of domestic innovation and innovation abroad. To test this hypothesis data for 7 European countries for the years 1971-1988 are used. The empirical results show that the relative rates of innovation (as measured by the ratio of patents to high-tech workers) are significant determinants of the relative wage.

Suggested Citation

  • Alison Butler & Michael J. Dueker, 1994. "Product cycles, innovation and relative wages in European countries," Working Papers 1994-022, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:1994-022
    DOI: 10.20955/wp.1994.022
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    References listed on IDEAS

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    1. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(1), pages 43-61.
    2. Zvi Griliches & Ariel Pakes & Bronwyn H. Hall, 1986. "The Value of Patents as Indicators of Inventive Activity," NBER Working Papers 2083, National Bureau of Economic Research, Inc.
    3. Jacob Mincer, 1991. "Human Capital, Technology, and the Wage Structure: What Do Time Series Show?," NBER Working Papers 3581, National Bureau of Economic Research, Inc.
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