Heterogeneous Technological Changes and Their Impacts on Income Inequality and Productivity Growth
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Authors
Zhu, Wenbo
Date
Type
thesis
Language
eng
Keyword
Technological Change , Income Inequality , Productivity Growth
Alternative Title
Abstract
I investigate different types of technological change and their impacts on wage
inequality and economic growth. In particular, I distinguish between
skill-complementing and skill-replacing technological changes, with an emphasis
on the latter. Skill-replacing technological change can take the form of an
organizational change, or the development of a certain type of machinery that
works with lower skilled workers. Essentially, skill-replacing technological
change increases specialization in tasks, so that less labour skill is required.
In contrast, skill-complementing technological change tends to increase the
productivity of and demand for high-skilled workers.
Combining two novel European data sets, I first document a previously unknown
fact: industries with proportionally more product innovation relative to process
innovation tend to pay higher skill premia, as measured by the wages of college
educated workers relative to those of high school graduates. To further
understand this observation, I develop a dynamic general equilibrium model in
which firms conduct both product innovation and process innovation endogenously.
This model provides a stylized interpretation in which product innovation is
skill-complementing, and process innovation is skill-replacing. I show how each
type of innovation affects the skill premium through the labour demand channel,
and also how the skill premium affects the incentives to develop each type of
innovation. Using the European data, I estimate this two-way relationship
derived from the model at the industry level. I address the issue of
simultaneity using an instrumental variables approach suggested by the model. I
also calibrate the model and conduct some quantitative exercises.
Finally, I develop an endogenous growth framework featuring minimum skill
requirements, two independent process innovations, and a heterogeneous labour
force. This model can simultaneously account for the hollowing out of the
middle class and the slow down in labour productivity growth, both of which were
observed in the United States and most European countries in the recent past. I
fully characterize the equilibrium of the model and derive conditions for both
phenomena to emerge. The relative intensity of different types of technological
change plays a central role in the framework.
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ProQuest PhD and Master's Theses International Dissemination Agreement
Intellectual Property Guidelines at Queen's University
Copying and Preserving Your Thesis
This publication is made available by the authority of the copyright owner solely for the purpose of private study and research and may not be copied or reproduced except as permitted by the copyright laws without written authority from the copyright owner.