Skill-Biased Innovation, Growth, and Inequality
Parallel to the widespread inequality phenomena in the advanced countries, there has been a growing literature about skill-biased technology and inequality. Among them, having analyzed the dynamics of technical unemployment in the framework of the induced factor bias of innovation, Stiglitz (2014) argued that the formulation of induced skill-biased innovation is one of the promising researches for analyzing the various inequalities prevailing in the OECD countries. One of the implications of the induced innovation framework in line with Kennedy (1964) and Samuelson (1966) is that relatively increasing of the factor share can induce firms to introduce its own factor-augmenting technical progress in the maximization of the instantaneous cost reduction rate of change on the concavity of the innovation frontier.
The author is grateful to Hideyuki Adachi, Professor Emeritus of Kobe University. He is also grateful to Tamotsu Nakamura, Takeshi Nakatani, Atsushi Miyake, and Hideaki Uchida for their valuable comments on an earlier version of this paper.
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