IDEAS home Printed from https://ideas.repec.org/p/unm/umamer/1999013.html
   My bibliography  Save this paper

Skill-Biased Technical Change: On Endogenous Growth, Wage Inequality and Government Intervention

Author

Listed:
  • Hollanders, Hugo
  • Weel, Bas ter

    (MERIT)

Abstract

This paper builds a general equilibrium model of endogenous growth outside the representativeagent framework to show that when individuals are heterogenous, persistent inequality will bethe result of economic growth. Individuals are assumed to be born with different abilities, whichwill lead to a steady state growth path of biased technical change towards individuals with ahigher ability. The problem of inequality as a result of skill-biased technical change is partiallysolved by allowing for government intervention. Intervention is shown to solve the problem tosuch a degree that particular subsidies and taxes on labor income are efficient.

Suggested Citation

  • Hollanders, Hugo & Weel, Bas ter, 1999. "Skill-Biased Technical Change: On Endogenous Growth, Wage Inequality and Government Intervention," Research Memorandum 013, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:umamer:1999013
    as

    Download full text from publisher

    File URL: https://www.merit.unu.edu/publications/rmpdf/1999/rm1999-013.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Jonathan E. Haskel & Matthew J. Slaughter, 1998. "Does the Sector Bias of Skill-Biased Technical Change Explain Changing Wage Inequality?," NBER Working Papers 6565, National Bureau of Economic Research, Inc.
    3. Michael Denny & Melvyn Fuss, 1983. "The Effects of Factor Prices and Technological Change on the Occupational Demand for Labor: Evidence from Canadian Telecommunications," Journal of Human Resources, University of Wisconsin Press, vol. 18(2), pages 161-176.
    4. G.M. Peter Swann, 2006. "Is the World Flat or Round? Mapping Changes in the Taste for Art," Chapters,in: New Frontiers in the Economics of Innovation and New Technology, chapter 6 Edward Elgar Publishing.
    5. Robert J. Barro, 2012. "Inflation and Economic Growth," CEMA Working Papers 568, China Economics and Management Academy, Central University of Finance and Economics.
    6. Gary S. Becker & Kevin M. Murphy & Robert Tamura, 1994. "Human Capital, Fertility, and Economic Growth," NBER Chapters,in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 323-350 National Bureau of Economic Research, Inc.
    7. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 369-405.
    8. Stokey, Nancy L, 1988. "Learning by Doing and the Introduction of New Goods," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 701-717, August.
    9. Hollanders, Hugo & Weel, Bas ter, 1998. "Skill-Biased Technological Change in an Endogenous Growth Model," Research Memorandum 016, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    10. Alan B. Krueger, 1993. "How Computers Have Changed the Wage Structure: Evidence from Microdata, 1984–1989," The Quarterly Journal of Economics, Oxford University Press, vol. 108(1), pages 33-60.
    11. Donald R. Davis & Trevor A. Reeve, 1997. "Human Capital, Unemployment and Relative Wages in a Global Economy," Harvard Institute of Economic Research Working Papers 1804, Harvard - Institute of Economic Research.
    12. Taylor, Alan M & Williamson, Jeffrey G, 1994. "Capital Flows to the New World as an Intergenerational Transfer," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 348-371, April.
    13. Daron Acemoglu, 1998. "Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality," The Quarterly Journal of Economics, Oxford University Press, pages 1055-1089.
    14. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, pages 323-351.
    15. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, pages 121-144.
    16. Bartel, Ann P & Sicherman, Nachum, 1998. "Technological Change and the Skill Acquisition of Young Workers," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 718-755, October.
    17. Alwyn Young, 1993. "Substitution and Complementarity in Endogenous Innovation," NBER Working Papers 4256, National Bureau of Economic Research, Inc.
    18. Andrew Hildreth, 1998. "Rent-Sharing And Wages: Product Demand Or Technology Driven Premia?," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 5(2-4), pages 199-226.
    19. Charles I. Jones, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, Oxford University Press, vol. 110(2), pages 495-525.
    20. James Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explanations With A Dynamic General Equilibrium Model of Labor Earnings With Heterogeneous Agents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 1-58, January.
    21. Donald R. Davis & Trevor A. Reeve, 1997. "Human Capital, Unemployment and Relative Wages in a Global Economy," Harvard Institute of Economic Research Working Papers 1804, Harvard - Institute of Economic Research.
    22. Grossman, Gene M & Helpman, Elhanan, 1989. "Product Development and International Trade," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1261-1283, December.
    23. Ziesemer, Thomas, 1991. "Human capital, market structure and taxation in a growth model with endogenous technical progress," Journal of Macroeconomics, Elsevier, pages 47-68.
    24. Grossman, Gene M & Helpman, Elhanan, 1990. "Comparative Advantage and Long-run Growth," American Economic Review, American Economic Association, pages 796-815.
    25. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    26. Stephen Machin & John Van Reenen, 1998. "Technology and Changes in Skill Structure: Evidence from Seven OECD Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1215-1244.
    27. Claudia Goldin & Lawrence F. Katz, 1998. "The Origins of Technology-Skill Complementarity," The Quarterly Journal of Economics, Oxford University Press, vol. 113(3), pages 693-732.
    28. Alwyn Young, 1993. "Substitution and Complementarity in Endogenous Innovation," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 775-807.
    29. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-784, August.
    30. Xiaokai Yang & Jeff Borland, 2005. "A Microeconomic Mechanism For Economic Growth," World Scientific Book Chapters,in: An Inframarginal Approach To Trade Theory, chapter 18, pages 409-436 World Scientific Publishing Co. Pte. Ltd..
    31. Ian M. McDonald & Robert M. Solow, 1985. "Wages and Employment in a Segmented Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 100(4), pages 1115-1141.
    32. Krugman, Paul R., 2000. "Technology, trade and factor prices," Journal of International Economics, Elsevier, pages 51-71.
    33. Meghir, Costas & Whitehouse, Edward, 1996. "The Evolution of Wages in the United Kingdom: Evidence from Micro Data," Journal of Labor Economics, University of Chicago Press, vol. 14(1), pages 1-25, January.
    34. Daron Acemoglu, 2003. "Patterns of Skill Premia," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 199-230.
    35. John E. DiNardo & Jörn-Steffen Pischke, 1997. "The Returns to Computer Use Revisited: Have Pencils Changed the Wage Structure Too?," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 291-303.
    36. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June.
    37. Kevin M. Murphy & W. Craig Riddell & Paul M. Romer, 1998. "Wages, Skills, and Technology in the United States and Canada," NBER Working Papers 6638, National Bureau of Economic Research, Inc.
    38. Redding, Stephen, 1996. "The Low-Skill, Low-Quality Trap: Strategic Complementarities between Human Capital and R&D," Economic Journal, Royal Economic Society, vol. 106(435), pages 458-470, March.
    39. Rolf Weder & Herbert Grubel, 1993. "The New Growth Theory and Coasean economics: Institutions to capture externalities," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), pages 488-513.
    40. 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 410-442, June.
    41. King, Mervyn A & Robson, Mark H, 1993. " A Dynamic Model of Investment and Endogenous Growth," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(4), pages 445-466, December.
    42. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 35-78.
    43. Mark Doms & Timothy Dunne & Kenneth R. Troske, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 253-290.
    44. Young, Alwyn, 1993. "Invention and Bounded Learning by Doing," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 443-472, June.
    45. Schneider, Johannes & Ziesemer, Thomas, 1994. "What's New and What's Old in New Growth Theory: Endogenous Technology, Microfoundation, and Growth Rate Predictions," MPRA Paper 56132, University Library of Munich, Germany.
    46. Verspagen, Bart, 1992. "Endogenous innovation in neoclassical growth models: A survey," Journal of Macroeconomics, Elsevier, pages 631-662.
    47. Xiaokai Yang & Jeff Borland, 2005. "A Microeconomic Mechanism For Economic Growth," World Scientific Book Chapters,in: An Inframarginal Approach To Trade Theory, chapter 18, pages 409-436 World Scientific Publishing Co. Pte. Ltd..
    48. Wood, Adrian, 1998. "Globalisation and the Rise in Labour Market Inequalities," Economic Journal, Royal Economic Society, vol. 108(450), pages 1463-1482, September.
    49. Harberger, Arnold C, 1998. "A Vision of the Growth Process," American Economic Review, American Economic Association, pages 1-32.
    50. Prescott, Edward C & Boyd, John H, 1987. "Dynamic Coalitions: Engines of Growth," American Economic Review, American Economic Association, pages 63-67.
    51. Entorf, Horst & Kramarz, Francis, 1997. "Does unmeasured ability explain the higher wages of new technology workers?," European Economic Review, Elsevier, vol. 41(8), pages 1489-1509, August.
    52. Bound, John & Johnson, George, 1992. "Changes in the Structure of Wages in the 1980's: An Evaluation of Alternative Explanations," American Economic Review, American Economic Association, pages 371-392.
    53. Heckman, James J & Sedlacek, Guilherme, 1985. "Heterogeneity, Aggregation, and Market Wage Functions: An Empirical Model of Self-selection in the Labor Market," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1077-1125, December.
    54. Vainiomaki, Jari & Laaksonen, Seppo, 1995. "Inter-industry wage differentials in Finland: Evidence from longitudinal census data for 1975-85," Labour Economics, Elsevier, vol. 2(2), pages 161-173, June.
    55. Costas Azariadis & Allan Drazen, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 501-526.
    56. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, pages 56-62.
    57. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    economic development an growth ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:unm:umamer:1999013. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Leonne Portz) or (Héctor Pastori). General contact details of provider: http://edirc.repec.org/data/meritnl.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.