Technological policy and wage inequality
Series
MPRA
Type
discussion paper
Date Issued
2006
Author(s)
Abstract
In this paper we argue that government procurement policy played a role in stimulating
the wave of innovation that hit the US economy in the 1980?s, as well as the simultaneous increase in inequality and in education attainment. Since the early 1980?s U.S. policy makers began targeting commercial innovations more directly and explicitly. We focus on the shift in the composition of public demand towards high-tech goods which, by increasing the market-size of innovative ?rms, functions as a de-facto innovation policy tool. We build a quality-ladders non-scale growth model with heterogeneous industries and endogenous supply of skills, and show both theoretically and empirically that increases in the technological content of public spending stimulates R&D, raises the wage of skilled workers and, at the same time, stimulates human capital accumulation. A calibrated version of the model suggests that government policy explains up to 32 percent of the observed increase in wage inequality in the period 1978-91.
the wave of innovation that hit the US economy in the 1980?s, as well as the simultaneous increase in inequality and in education attainment. Since the early 1980?s U.S. policy makers began targeting commercial innovations more directly and explicitly. We focus on the shift in the composition of public demand towards high-tech goods which, by increasing the market-size of innovative ?rms, functions as a de-facto innovation policy tool. We build a quality-ladders non-scale growth model with heterogeneous industries and endogenous supply of skills, and show both theoretically and empirically that increases in the technological content of public spending stimulates R&D, raises the wage of skilled workers and, at the same time, stimulates human capital accumulation. A calibrated version of the model suggests that government policy explains up to 32 percent of the observed increase in wage inequality in the period 1978-91.
Language
English
Keywords
R&D-driven growth theory
government procurement
wage inequality
educational choice
technology policy.
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Economic Policy
Refereed
No
Publisher
University Library of Munich
Number
10140
Start page
33
Subject(s)
Eprints ID
222129
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Name
MPRA_paper_10140.pdf
Size
387.7 KB
Format
Adobe PDF
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