EconPapers    
Economics at your fingertips  
 

Inequality, Technology, and the Social Contract

Roland Benabou ()

Papers from Princeton University, Research Program in Political Economy

Abstract: The distribution of human capital and income lies at the center of a nexus of forces that shape a country's economic, institutional and technological structure. I develop a unified model to analyze these interactions and their growth consequences. First, I identify the key factors that make both European-style "welfare state" and US-style "laissez-faire" social contracts sustainable. I also compare the growth rates of these two politico-economic steady states, which are not Pareto-rankable. Second, I examine how technological evolutions affect the set of redistributive institutions that can be durably sustained, showing how skill-biased technical change may cause the welfare state to unravel. Third, I model the endogenous determination of technology or organizational form that results from firms' tailoring the flexibility of their production processes to the distribution of workers' skills. Fourth, I examine how institutions also shape the course of technology; thus, a world-wide shift in the technology frontier results in different evolutions of production processes and skill premia across countries with different social contracts. Finally, I ask what joint configurations of technology, inequality and redistributive policy are feasible in the long run, when all three are endogenous. I show how the diffusion of technology leads to the "exporting" of inequality across borders; and how this, in turn, generates spillovers between social contracts that make it more difficult for nations to maintain distinct institutions and social structures.

JEL-codes: D31 (search for similar items in EconPapers)
Date: 2004-10
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.nber.org/papers/w10371.pdf

Related works:
Chapter: Inequality, Technology and the Social Contract (2005) Downloads
Working Paper: Inequality, Technology and the Social Contract (2004) Downloads
Working Paper: Inequality, Technology, and the Social Contract (2004) Downloads
Working Paper: Inequality, Technology, and the Social Contract (2003) Downloads
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:ecl:prirpe:08-15-2005b

Access Statistics for this paper

More papers in Papers from Princeton University, Research Program in Political Economy Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2019-11-17
Handle: RePEc:ecl:prirpe:08-15-2005b