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Optimal Technology and Development

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  • Hernan J. Moscoso Boedo

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Abstract

Skill intensive technologies seem to be adopted by rich countries rather than poor ones. Related to that observation, the ratio of wages of skilled to unskilled workers - the skill premium - shows two important features over time and across countries. In the US the skill premium decreased during the first half of the 20th century and it increased after 1950, evolving according to a U shaped pattern. On the other hand, the same measure across countries around 1990 is hump shaped when countries are ordered by GDP per worker. By modeling the decisions for factor accumulation and technology adoption, this paper gives a systematic explanation as to why we see ever more skill intensive technologies being adopted both over time in the US and across countries. The model developed here endogenously generates predictions for the skill premium that are consistent with both the US and international observations under the same set of parameter values

Suggested Citation

  • Hernan J. Moscoso Boedo, 2007. "Optimal Technology and Development," Virginia Economics Online Papers 370, University of Virginia, Department of Economics.
  • Handle: RePEc:vir:virpap:370
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    File URL: http://www.virginia.edu/economics/RePEc/vir/virpap/papers/virpap370.pdf
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    References listed on IDEAS

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    Cited by:

    1. Hernan J. Moscoso Boedo, 2006. "Former Communist Countries and their transition to Capitalism," Virginia Economics Online Papers 372, University of Virginia, Department of Economics.

    More about this item

    Keywords

    skill biased technological change; skill premium; endogenous technology; inequality;

    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • N32 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: 1913-
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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