EFFECTS OF INTERNATIONAL DIFFUSION OF A GENERAL PURPOSE TECHNOLOGY ON WAGE INEQUALITY

Oscar Afonso and Ana Maria Bandeira

Hitotsubashi Journal of Economics, 2013, vol. 54, issue 2, 203-220

Abstract: This paper studies the effects of the diffusion of a General Purpose Technology (GPT) that spreads first within the developed North country of its origin, and then to a developing South country. In the developed general equilibrium growth model, each final good can be produced by one of two technologies. Each technology is characterized by a specific labor complemented by a specific set of intermediate goods, which are enhanced periodically by Schumpeterian R&D activities. When quality reaches a threshold level, a GPT arises in one of the technologies and spreads first to the other technology within the North. Then, it propagates to the South, following a similar sequence. Since diffusion is not even, neither intra- nor inter-country, the GPT produces successive changes in the direction of technological knowledge and in inter- and intra-country wage inequality. Through this mechanism the different observed paths of wage inequality can be accommodated.

Keywords: North-South; general purpose technology; direction of technological knowledge; wage inequality (search for similar items in EconPapers)
JEL-codes: F43 J31 O31 O33 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitjec:v:54:y:2013:i:2:p:203-220

DOI: 10.15057/26014

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