One or many Kuznets curves? Short and long run effects of the impact of skill-biased technological change on income inequality
Grimalda, Gianluca and Vivarelli, Marco, 1963- (2004) One or many Kuznets curves? Short and long run effects of the impact of skill-biased technological change on income inequality. Working Paper. University of Warwick. Centre for the Study of Globalisation and Regionalisation, Coventry.
WRAP_Grimalda_wp14404.pdf - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader
Official URL: http://www2.warwick.ac.uk/fac/soc/csgr/research/wo...
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)|
|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|
|Number of Pages:||42|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
|Funder:||International Labour Office (ILO)|
|References:||- Aghion, P., Caroli, E., and C. GarcíaPeñalosa, (1999), Inequality and Economic Growth: The Perspective of the New Growth Theories, Journal of Economic Literature, 37, 1615-60. - Ahluwalia, M. (1976), Income Distribution and Development, American Economic Review, 66, 128-35. - Anand S. and S.M. Kanbur (1993), The Kuznets Process and the Inequality- Development Relationship, Journal of Development Economics, 40, 25-52. - Antonelli, C. (1995), The Economics of Localized Technological Change and Industrial Dynamics. Kluwer, Boston. - Atkinson, A. B. and J. E. Stiglitz, (1969), A New View of Technological Change, Economic Journal, 79, 573-8. - Barro, R. J. (2000), Inequality and Growth in a Panel of Countries, Journal of Economic Growth , 5, 5-32. - Berman, E. and S. Machin (2000), Skill-Biased Technology Transfer around the World, Oxford Review of Economic Policy, 16, 12-22. - Berman, E. and S. Machin (2004), Globalization, Skill-Biased Technological Change and Labour Dema nd, in Lee, E. and M. Vivarelli, (eds), Understanding Globalization, Employment and Poverty Reduction, Palgrave Macmillan, New York, forthcoming. - Bourguignon, F. (1990), Growth and Inequality in the Dual Model of Development: The Role of Demand Factors, Review of Economic Studies, 57, 215-28. - Cornia, G. A. and S. Kiiski (2001), Trends in Income Distribution in the Post-World War II Period, WIDER Discussion Paper no. 2001/89, World Institute for Development Economics Research, United Nations University, Helsinki. - Deininger; K. and Squire, L. (1996). ‘A New Data Set Measuring Income Inequality’, The World Bank Economic Review, 10, 565-91 - Dollar D. and A. Kraay (2001), Trade, Growth and Poverty, mimeo , Development Research Group, The World Bank, Washington, June. - Edwards, S. (1997), Trade Policy, Growth and Income Distribution, American Economic Review Papers and Proceedings, 87, 205-10. - Fagerberg, J. (1994). Technology and international differences in growth rates, Journal of Economic Literature, 32, 1147-75 - Fagerberg, J. and Verspagen, B. (2002). Technology-gaps, innovation-diffusion and transformation: an evolutionary interpretation, Research Policy, 31, 1291-1305 - Fields, G. (1980), Poverty, Inequality and Development, Cambridge University Press, Cambridge. - Galor, O. and Moav, O. (2000). Ability-Biased Technological Transition, Wage Inequality and Economic Growth, Quarterly Journal of Economics, 115, 469-97 - Galor, O. and Tsiddon, D. (1996). Income Distribution and Growth: The Kuznets Hypothesis Revisited, Economica, 63, supplement, S103-S117. - Galor, O. and Tsiddon, D. (1997). ‘Technological Progress, Mobility and Economic Growth’, American Economic Review , 87, 363-82 - Goodwin R M (1967), ‘A Growth Cycle’, in: Feinstein, CH (ed): Socialism, Capitalism and Economic Growth , London: Mac Millan - Greenwood, J. and B. Jovanovic (1990), Financial Development, Growth and the Distribution of Income, Journal of Political Economy, 98, 1076-1107 - Grimalda, G. (2002). Growth with Competing Technologies and Bounded Rationality, Southampton University Discussion Papers N. 0205 - Guckhenheimer, J. and Holmes, P. (1990): Nonlinear Oscillations, Dynamical Systems and Bifurcations of Vector Fields, Berlin: Springer Verlag - Higgins, M. and J. G. Williamson (1999), Explaining Inequality the World Round: Cohort Size, Kuznets Curves, and Openness, NBER Working Paper no. 7224 , National Bureau of Economic Research, Cambridge (Mass.). - Hirsch M.W. and Smale S. (1974): Differential Equations, Dynamical Systems, and linear Algebra, London: Academic Press - Hogarth, R., and M. Reder (eds.), (1986). Rational Choice, Chicago: The University of Chicago Press - Kaldor, N. (1957). “A Model of Economic Growth, Economic Journal”, Economic Journal, 67, 591-624 - Kuznets, S. (1955), Economic Growth and Income Inequality, American Economic Review, 45, 1-28. - Kuznets, S. (1963), Quantitative Aspects of the Economic Growth of Nations, Economic Development and Cultural Change, 11, 1-80. - Lall, S. (2004). The Employment Impact of Globalisation in Developing Countries, in Lee, E. and M. Vivarelli, (eds.), Understanding Globalization, Employment and Poverty Reduction, Palgrave Macmillan, New York, forthcoming. - Li, H., L. Squire and H. Zou (1998), Explaining International and Intertemporal Variations in Income Inequality, Economic Journal, 108, 26-43. - Lundberg M. and L. Squire (2001), The Simultaneous Evolution of Growth and Inequality, mimeo , The World Bank, Washington. - Machin, S. and J. Van Reenen (1998), Technology and Cha nges in the Skill Structure: Evidence from Seven OECD Countries, Quarterly Journal of Economics, 113, 1215-44 - Mankiw, N. G., Romer, D. And Weil, D. (1992) ‘A Contribution to the Empirics of Economic Growth’, Quarterly Journal of Economics , 107, 407-37. - Nelson R, Winter S. G. (1982), An Evolutionary Theory of Economic Change, Cambridge MA: The Belknap Press of Harvard University - Papanek, G. and O. Kyn (1986), The Effect on Income Distribution of Development, the Growth Rate and Economic Strategy, Journal of Development Economics, 23, 55- 65. - Ravallion, M. (2001), Growth, Inequality and Poverty: Looking beyond Averages, mimeo, Development Research Group, The World Bank, Washington, June. - Reuveny, R. and Q. Li (2003), Democracy, Economic Openness, and Income Inequality: An Empirical Analysis’, Comparative Political Studies, 36. - Robbins, D. J. (1996), HOS Hits Facts: Facts Win; Evidence on Trade and Wages in the Developing World, Development Discussion Paper no. 557, Harvard Institute for International Development, Harvard University, Cambridge (Mass.). - Robbins, D. J. (2003), The Impact of Trade Liberalization Upon Inequality in Developing Countries: A Review of Theory and Evidence, working paper, International Policy Group, International Labour Office, Geneva - Robinson, S. (1976), A Note on the U Hypothesis Relating Income Inequality and Economic Development, American Economic Review, 66, 437-40. - Sala -i-Martin, X. (2002), The Disturbing ‘Rise’ of Global Income Inequality, NBER Working Paper no. 8904, National Bureau of Economic Research, Cambridge (Mass.). - Silverberg, G. and B. Verspagen (1995), “An evolutionary model of long term cyclical variations of catching up and falling behind”, Journal of Evolutionary Economics, 5, 209-28 - Simon, H. (1955). ‘Behavioral Model of Rational Choice’, Quarterly Journal of Economics, 69, 99-118 - Soete, L. and Turner, R. (1984). “Technology Diffusion and the Rate of Technical Change”, Economic Journal, 94, 612-24 - Vivarelli, M. (2004). Globalization, Skills and Within-Country Income Inequality in Developing Countries, in Lee, E. and M. Vivarelli, (eds.), Understanding Globalization, Employment and Poverty Reduction, Palgrave Macmillan, New York, forthcoming. - Weibull, J. (1995), Evolutionary Game Theory, Mit Press, Cambridge: (Mass.). - Wood, A.(1994), North-South Trade, Employment and Inequality. Changing Fortunes in a Skill-Driven World, Clarendon Press, Oxford.|
Actions (login required)