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Technological progress and inequality: an ambiguous relationship

In: Schumpeterian Perspectives on Innovation, Competition and Growth

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  • Maurizio Iacopetta

    (School of Economics, Georgia Institute of Technology)

Abstract

Faster technological change does not necessarily widen wage inequality. This occurs only if technical progress takes the form of product improvements. Conversely, cost-reducing innovation favors a reduction in inequality. This novel result is obtained in a theoretical framework in which individuals can choose both the quality of the equipment and the retooling time. The main implication of this work is that the rapid decline of the durable goods’ price documented in the postwar period, and especially since the 1970s, should have favored areductionin income inequality. The popular view that attributes the rise in inequality to the spread of information technologies is questioned by this analysis.

Suggested Citation

  • Maurizio Iacopetta, 2009. "Technological progress and inequality: an ambiguous relationship," Springer Books, in: Uwe Cantner & Jean-Luc Gaffard & Lionel Nesta (ed.), Schumpeterian Perspectives on Innovation, Competition and Growth, pages 181-201, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-93777-7_11
    DOI: 10.1007/978-3-540-93777-7_11
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    Cited by:

    1. Rajarshi Majumder, 2018. "Technology and Labour Market: Insights from Indian Manufacturing Sector," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 61(2), pages 321-338, June.
    2. Benos, Nikos & Tsiachtsiras, Georgios, 2019. "Innovation and Income Inequality: World Evidence," MPRA Paper 92050, University Library of Munich, Germany.
    3. Vassilis Tselios, 2011. "Is Inequality Good for Innovation?," International Regional Science Review, , vol. 34(1), pages 75-101, January.

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    More about this item

    Keywords

    Inequality; Product innovation; Process innovation;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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