Technological Progress, Mobility and Economic Growth

This paper analyses the relationship between technological progress, the transmission of income inequality across generations, and economic growth. The analysis demonstrates that the interplay between technological progress and two components that determine individual earnings - parental human capital and individual ability - governs the evolutionary Patterns of intergenerational earnings mobility, the pace of technological progress, and economic growth. In periods of major technological inventions the ability effect is the dominating factor. The decline in the relative importance of initial parental conditions (i.e., the driving force behind the persistence of inequality) enhances mobility and generates a larger concentration of individuals with high levels of ability and human capital in technologically advanced sectors, stimulating further technological progress and economic growth. In periods of technological innovations, however, once existing technologies become more accessible, the parental specific human capital effect is the dominating factor, mobility is diminished and inequality becomes more persistent. The reduction in the concentration of human capital in technologically advanced sectors diminishes the likelihood of major technological breakthroughs and slows down future economic growth. User friendliness, therefore, becomes unfriendly to future economic growth.


Issue Date:
1996-05
Publication Type:
Working or Discussion Paper
DOI and Other Identifiers:
Record Identifier:
https://ageconsearch.umn.edu/record/275616
Language:
English
Total Pages:
44
Series Statement:
Working Paper No. 13-96




 Record created 2018-08-01, last modified 2020-10-28

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