Wage inequality and welfare effects of domestic technological progress: a dual economy approach
This paper shows that technological progress caused by a domestic high-tech firm always increases the skilled-unskilled wage inequality, using a two-sector, two-labor model. Also, we derive a sufficient condition for the technological progress to be effective in increasing domestic welfare. In the Cobb Douglas production function case, if the equilibrium relative wage is greater than a threshold level, domestic welfare unambiguously increases in response to the technological progress. Moreover, we also provide some policy implications of our results, in the context of developing countries.
Year of publication: |
2007-11-13
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Authors: | Nakamura, Takeho |
Published in: |
Economics Bulletin. - AccessEcon, ISSN 1545-2921. - Vol. 15.2007, 22, p. 1-14
|
Publisher: |
AccessEcon |
Saved in:
freely available
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