Technology Diffusion and Its Effects on Social Inequalities

Manuela Magalhães and Christian Hellström
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Christian Hellström: Aalto University, Postal: P.O. Box 11000 , FI-00076 Aalto, Finland

No 12-17, QM&ET Working Papers from University of Alicante, D. Quantitative Methods and Economic Theory

Abstract: We develop a dynamic general-equilibrium model in which growth is driven by a skill-biased technology diffusion to reproduce trends in the income inequality, and the labor and skills supplies of the United States between 1969 and 1996. We incorporate education and leisure–labor decisions, and human-capital accumulation. We provide an explanation to why individuals invest in human capital when the investment premium is going down and why the skill-premium is going up when the skills supply is increasing. In addition, our model is the first general-equilibrium model, to our knowledge, that is consistent with a decline of unskilled wages and low growth of productivity in which the effects of a skill-biased technology diffusion on social inequalities are studied. We show that the effects of labor supply decisions on the skill premium cannot be neglected in a diffusion model.

Keywords: Heterogeneous agents; Inequality; Skill-Biased Technical Change (search for similar items in EconPapers)
JEL-codes: J22 J23 J24 J31 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2012-12-17
New Economics Papers: this item is included in nep-dge
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Journal Article: Technology diffusion and its effects on social inequalities (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:qmetal:2012_017

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