Wage inequality and welfare effects of domestic technological progress: a dual economy approach

Takeho Nakamura ()
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Takeho Nakamura: Graduate School of Economics, Nagoya University

Economics Bulletin, 2007, vol. 15, issue 22, 1-14

Abstract: This paper shows that technological progress caused by a domestic high-tech firm always increases the skilled-unskilled wage inequality, using a two-sector, two-labor model. Also, we derive a sufficient condition for the technological progress to be effective in increasing domestic welfare. In the Cobb Douglas production function case, if the equilibrium relative wage is greater than a threshold level, domestic welfare unambiguously increases in response to the technological progress. Moreover, we also provide some policy implications of our results, in the context of developing countries.

JEL-codes: O1 O3 (search for similar items in EconPapers)
Date: 2007-11-13
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Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-07o10034

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