Creative Destruction and the Rise of Inequality

Rodrigue Mendez

Journal of Economic Growth, 2002, vol. 7, issue 3, 259-81

Abstract: Common wisdom interprets the rise in inequality of the last two decades as the result of a skill-biased labor demand shift. This explanation does not account for two important observations: (i) within-group inequality has also markedly risen, and (ii) the rise of inequality has been accompanied by a rise of the volatility of earnings. This paper argues that a dual labor market structure, where some workers are paid efficiency-wages can account for the empirical regularities, in the absence of skilled biased technological change. The analysis demonstrates that an unbiased innovation, as well as North-South trade, can contribute to the efficiency wage premium, and thus to wage inequality, by increasing labor turnover. Copyright 2002 by Kluwer Academic Publishers

Date: 2002
References: Add references at CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://journals.kluweronline.com/issn/1381-4338/contents link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jecgro:v:7:y:2002:i:3:p:259-81

Ordering information: This journal article can be ordered from
http://www.springer. ... th/journal/10887/PS2

Access Statistics for this article

Journal of Economic Growth is currently edited by Oded Galor

More articles in Journal of Economic Growth from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().