The technology cycle and inequality

Boyan Jovanovic

    Research output: Contribution to journalArticlepeer-review

    Abstract

    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.

    Original languageEnglish (US)
    Pages (from-to)707-729
    Number of pages23
    JournalReview of Economic Studies
    Volume76
    Issue number2
    DOIs
    StatePublished - 2009

    ASJC Scopus subject areas

    • Economics and Econometrics

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