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The determinants of long-run inequality

  • Andrea, Canidio
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    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.

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    File URL: http://mpra.ub.uni-muenchen.de/25137/1/MPRA_paper_25137.pdf
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    File URL: http://mpra.ub.uni-muenchen.de/28074/1/MPRA_paper_28074.pdf
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    File URL: http://mpra.ub.uni-muenchen.de/30256/2/MPRA_paper_30256.pdf
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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 25137.

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    Date of creation: May 2009
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    Handle: RePEc:pra:mprapa:25137
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    1. Greenwood, Jeremy & Jovanovic, Boyan, 1988. "Financial Development, Growth, And The Distribution Of Income," Working Papers 88-12, C.V. Starr Center for Applied Economics, New York University.
    2. Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-67, June.
    3. Oded Galor & Joseph Zeira, 2013. "Income Distribution and Macroeconomics," Working Papers 2013-12, Brown University, Department of Economics.
    4. Robert M. Townsend & Kenichi Ueda, 2006. "Financial Deepening, Inequality, and Growth: A Model-Based Quantitative Evaluation -super-1," Review of Economic Studies, Oxford University Press, vol. 73(1), pages 251-293.
    5. Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-98, April.
    6. Dilip Mookherjee & debraj Ray, 2005. "Occupational Diversity and Endogenous Inequality," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-142, Boston University - Department of Economics.
    7. Mookherjee, Dilip & Napel, Stefan, 2007. "Intergenerational mobility and macroeconomic history dependence," Journal of Economic Theory, Elsevier, vol. 137(1), pages 49-78, November.
    8. Rigolini, Jamele, 2004. "Education technologies, wages and technological progress," Journal of Development Economics, Elsevier, vol. 75(1), pages 55-77, October.
    9. Oded Galor & Omer Moav, 2000. "Ability-Biased Technological Transition, Wage Inequality, And Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 469-497, May.
    10. Piketty, Thomas, 1997. "The Dynamics of the Wealth Distribution and the Interest Rate with Credit Rationing," Review of Economic Studies, Wiley Blackwell, vol. 64(2), pages 173-89, April.
    11. Ljungqvist, Lars, 1993. "Economic underdevelopment : The case of a missing market for human capital," Journal of Development Economics, Elsevier, vol. 40(2), pages 219-239, April.
    12. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    13. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
    14. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    15. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-89, December.
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