GROWTH AND WAGE INEQUALITY IN A SCALE‐INDEPENDENT MODEL WITH R&D AND HUMAN‐CAPITAL ACCUMULATION

Oscar Afonso

Manchester School, 2010, vol. 78, issue 2, 149-182

Abstract: We present a dynamic, non‐scale general equilibrium model with two human‐capital types where Schumpeterian R&D and human‐capital accumulation are the engines of growth and wage inequality. In particular, wage inequality is encouraged by relative changes in supply and demand of both human‐capital types. Relative supply restricts employed human‐capital levels. Relative demand is instantly affected by a new general‐purpose technology and, as in the skill‐biased technological change literature, by technological‐knowledge bias. By considering substitutability between technologies and complementarity between inputs, the bias is driven by the price channel (not by the market‐size channel) and is affected by human‐capital accumulation.

Date: 2010
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https://doi.org/10.1111/j.1467-9957.2009.02135.x

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