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The Two Sector Model of Learning-By Doing and Productivity Differences

Tuna Dinç ()
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Tuna Dinç: Department of Economics, Yildiz Technical University, Turkey

Panoeconomicus, 2012, vol. 59, issue 5, 583-598

Abstract: This paper proposes that even when all countries have access to common technology frontier and can use the technologies which are fully appropriate to their needs, there will still be productivity differences across countries depending on their relative skill endowments. To illustrate this view, we have constructed a two sector model of productivity differences in which the level of technology is determined endogenously depending on the aggregate capital externalities. The relative supply of skilled and unskilled labor determines the direction of technical choices of the countries and differences in these relative factor supplies lead to cross-country income differences combined with the fact that capital is more productive in the advance of the skilled labor complement technologies than in the unskilled labor complement technologies.

Keywords: Productivity differences; Technological change; Skilled/unskilled labor (search for similar items in EconPapers)
JEL-codes: O33 O40 J24 (search for similar items in EconPapers)
Date: 2012
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