Journal Article

The Technology Cycle and Inequality

Boyan Jovanovic

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 76, issue 2, pages 707-729
Published in print April 2009 | ISSN: 0034-6527
Published online April 2009 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/j.1467-937X.2009.00532.x
The Technology Cycle and Inequality

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  • Technological Change; Research and Development
  • International Trade
  • Microeconomics

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Motivated by the observed rise in the trade of technology, I analyse how technology would spread in a frictionless market. In such a world, low-skilled agents prefer to use old technology because it costs less; their skills do not justify the use of frontier technology. The model generates a technology-life cycle of somewhere between 68 and 124 years and per-capita income differential factors between 2.3 and 4.5. The model matches fairly well the cross-section relation between a country's income per capita and the average age of the technologies that its residents use. It is also consistent with aspects of the observed positive relation between income and imports of technology.

Keywords: D31; F14; O33; O34

Journal Article.  9862 words.  Illustrated.

Subjects: Technological Change; Research and Development ; International Trade ; Microeconomics

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