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One or many Kuznets curves? Short and long run effects of the impact of skill-biased technological change on income inequality
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Grimalda, Gianluca and Vivarelli, Marco (2004) One or many Kuznets curves? Short and long run effects of the impact of skill-biased technological change on income inequality. Working Paper. Coventry: University of Warwick. Centre for the Study of Globalisation and Regionalisation. Working papers (University of Warwick. Centre for the Study of Globalisation and Regionalisation) (No.144).
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Official URL: http://www2.warwick.ac.uk/fac/soc/csgr/research/wo...
Abstract
We draw on a dynamical two-sector model and on a calibration exercise to study the impact of a skill-biased technological shock on the growth path and income distribution of a developing economy. The model builds on the theoretical framework developed by Silverberg and Verspagen (1995) and on the idea of localised technological change (Atkinson and Stiglitz, 1969) with sector-level increasing returns to scale. We find that a scenario of catching-up to the high-growth steady state is predictable for those economies starting off with a high enough endowment of skilled workforce. During the transition phase, if the skill upgrade process for the workforce is relatively slow, the typical inverse-U Kuznets pattern emerges for income inequality in the long run. Small-scale Kuznets curves, driven by sectoral business cycles, may also be detected in the short run. Conversely, economies initially suffering from significant skill shortages remain trapped in a low-growth steady state. Although the long-term trend is one of decreasing inequality, small-scale Kuznets curves may be detected even in this case, which may cause problems of observational equivalence between the two scenarios for the policy-maker. The underlying factors of inequality, and the evolution of a more comprehensive measure of inequality than the one normally used, are also analysed.
Item Type: | Working or Discussion Paper (Working Paper) | ||||
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Subjects: | H Social Sciences > HD Industries. Land use. Labor | ||||
Divisions: | Faculty of Social Sciences > Centre for the Study of Globalisation and Regionalisation | ||||
Library of Congress Subject Headings (LCSH): | Wage differentials, Technology transfer -- Economic aspects, Income distribution -- Mathematical models, Wages -- Skilled labor | ||||
Series Name: | Working papers (University of Warwick. Centre for the Study of Globalisation and Regionalisation) | ||||
Publisher: | University of Warwick. Centre for the Study of Globalisation and Regionalisation | ||||
Place of Publication: | Coventry | ||||
Official Date: | October 2004 | ||||
Dates: |
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Number: | No.144 | ||||
Number of Pages: | 42 | ||||
Institution: | University of Warwick | ||||
Status: | Not Peer Reviewed | ||||
Access rights to Published version: | Open Access (Creative Commons) | ||||
Funder: | International Labour Office (ILO) |
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