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The Product Cycle and Inequality

  • Boyan Jovanovic

This paper models the product cycle and explains how it relates to world inequality. In the model, both phenomena arise because skilled people have a comparative advantage in making high-tech products. The model can explain up to a 10:1 income differential between people and up to a 7:1 differential between countries.

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Paper provided by Society for Economic Dynamics in its series 2005 Meeting Papers with number 199.

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Date of creation: 2005
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Handle: RePEc:red:sed005:199
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  1. Eaton, Jonathan & Kortum, Samuel, 1999. "International Technology Diffusion: Theory and Measurement," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(3), pages 537-70, August.
  2. Xavier Sala-i-Martin, 2002. "The world distribution of income (estimated from individual country distributions)," Discussion Papers 0102-58, Columbia University, Department of Economics.
  3. Krugman, Paul, 1979. "A Model of Innovation, Technology Transfer, and the World Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 253-66, April.
  4. Stokey, Nancy L, 1991. "The Volume and Composition of Trade between Rich and Poor Countries," Review of Economic Studies, Wiley Blackwell, vol. 58(1), pages 63-80, January.
  5. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  6. Diego Comin & Bart Hobijn, 2004. "Neoclassical Growth and the Adoption of Technologies," NBER Working Papers 10733, National Bureau of Economic Research, Inc.
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