Effects of Learning-by-doing, technology-adoption costs and wage inequality

Rui Leite () and Oscar Afonso
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Rui Leite: Faculdade de Economia, Universidade do Porto, Portugal

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: In the dominant literature, the technological-knowledge bias that drives wage inequality is determined by the market-size channel. We develop an endogenous growth model with two technologies in which: a specific quality of labour, low or high-skilled, is combined with a specific set of quality-adjusted intermediate goods; the market-size channel is practically removed; adoption costs and learning-by-doing are linked with labour endowments. By solving transitional dynamics numerically, we show that changes in the supply of labour affect learning-by-doing and technology-adoption costs, which, in turn, influence the technological-knowledge bias and thus wage inequality. The proposed mechanisms can accommodate facts not explained by the previous literature.

Keywords: Learning-by-doing; Adoption costs; Technological-knowledge bias; Wage inequality; Numerical simulations (search for similar items in EconPapers)
JEL-codes: C61 J31 O31 O33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-dev, nep-hrm, nep-knm and nep-lab
Date: 2008-04

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Persistent link: http://EconPapers.repec.org/RePEc:por:fepwps:272

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