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Technology, Entrepreneurship, And Inequality

  • Alfonso Gambardella
  • David Ulph
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    This paper links the rise of new industries populated by skill-intensive companies, and the divergence in labour incomes between skills. Our model explains inequality by the fact that as the skilled workers move towards new Silicon-Valley type firms, the reduced complementarity between skilled and unskilled workers in the traditional manufacturing sectors lessens the productivity of the latter. In addition, knowledge externalities in the modern sector produce two equilibria in which either the modern sector dominates (and inequality between skills is high), or manufacturing dominates (inequality is low). We provide suggestive evidence consistent with our model.

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    File URL: http://www.lem.sssup.it/WPLem/files/2002-06.pdf
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    Paper provided by Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 2002/06.

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    Date of creation: 10 Dec 2002
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    Handle: RePEc:ssa:lemwps:2002/06
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    3. Martin Feldstein, 1998. "Income Inequality and Poverty," NBER Working Papers 6770, National Bureau of Economic Research, Inc.
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    12. Andrew B. Bernard & J. Bradford Jensen, 2000. "Understanding Increasing and Decreasing Wage Inequality," NBER Chapters, in: The Impact of International Trade on Wages, pages 227-268 National Bureau of Economic Research, Inc.
    13. Ashish Arora & Andrea Fosfuri & Alfonso Gambardella, 2004. "Markets for Technology: The Economics of Innovation and Corporate Strategy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511819, December.
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    15. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 339-376.
    16. repec:dau:papers:123456789/10091 is not listed on IDEAS
    17. 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.
    18. 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.
    19. Peter Gottschalk, 1997. "Inequality, Income Growth, and Mobility: The Basic Facts," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 21-40, Spring.
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