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The determinants of long-run inequality

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  • Andrea, Canidio

Abstract

I explore the effect of skill-biased technological change on long-run inequality by building a model where the supply of skilled and unskilled workers, the cost of education, and credit rationing are endogenous. In the model, the existence of unequal steady states does not depend on the degree of technological skill bias, but on the credit market, the cost of education, and the growth rate of the economy. However, by building an appropriate measure of inequality, I show that when unequal steady states exist, economies with a higher technological skill bias have a greater long-run inequality. Therefore, the impact of skill-biased technological change on inequality may be permanent.

Suggested Citation

  • Andrea, Canidio, 2009. "The determinants of long-run inequality," MPRA Paper 25137, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:25137
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    References listed on IDEAS

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    More about this item

    Keywords

    Endogenous Inequality; Skill Bias; Credit Rationing; Growth;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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