Innovation and Inequality

Gilles Saint-Paul is professor of economics at the Toulouse School of Economics and at the University of London's Birkbeck College. His books include "The Political Economy of Labour Market Institutions" and "Dual Labor Markets".

• Introduction vii Chapter 1: Which Tools Do We Need? 1 1.1 Production and Factor Prices 2 1.2 Factor Prices and Income Distribution 6 1.3 Factor Accumulation 11 1.4 Endogenous Technical Change 15 Chapter 2: Productivity and Wages in Neoclassical Growth Models 23 2.1 The Short Run 25 2.2 The Long Run 26 2.3 Conclusion 31 Chapter 3: Heterogeneous Labor 32 3.1 Skill-Biased Technical Progress 32 3.2 Capital-Skill Complementarity 35 3.3 Unbalanced Growth 38 3.4 Conclusion 41 Chapter 4: Competing Technologies 42 4.1 Learning the New Technology Is Costly 43 4.2 The New Technology Has Different Factor Intensities 52 4.3 Asymmetric Technical Progress 54 4.4 Conclusion 56 Chapter 5: Supply Effects 57 5.1 Supply Effects and Competing Technologies 58 5.2 Induced Bias in Innovation 72 5.3 Conclusion 84 Chapter 6: Labor as a Quality Input: Skill Aggregation and Sectoral Segregation 85 6.1 Bundling and Pricing of Labor Market Characteristics 86 6.2 Conclusion 98 Chapter 7: The Economics of Superstars 99 7.1 A Simple Model 100 7.2 Occupational Choice and Displacement 103 7.3 Growth and the Allocation of Talent 108 7.4 Hierarchy and Span of Control 109 7.5 Conclusion 116 Chapter 8: Complementarities and Segregation by Skills 117 8.1 A Simple Model 117 8.2 Application: Household Income Inequality and Assortative Mating 125 8.3 Extension: Increasing Firm Size and the Number of Worker Types in Segregated Equilibria 127 8.4 Aggregating Individual Interactions 131 8.5 Conclusion 148 8.6 Appendix 148 Chapter 9: Demand Effects 152 9.1 The Isoelastic Benchmark 153 9.2 Nonhomothetic Utility 154 9.3 The Limited Needs Property 155 9.4 Dynamics: Growth and the Introduction of New Varieties 158 9.5 An Application to Globalization 163 9.6 Asymmetries between Goods 165 9.7 Conclusion 171 9.8 Appendix 172 Chapter 10: Nonhomothetic Preferences and the Distributive Effects of Innovation and Intellectual Property 174 10.1 The Social Welfare Problem 175 10.2 Second-Best Analysis: The Role of Intellectual Property 179 10.3 Conclusion 182 10.4 Appendix: Derivation of (10.11) 183 Epilogue 184 References 187

"This book is a must read for anyone with an interest in what Tinbergen once termed 'the race between education and technology'... Gilles Saint-Paul has written a book that takes stock of a debate that, for now, has more or less petered out in the literature. But he does so in a comprehensive and concise way, and, as his focus is theoretical, the book collects the most relevant and interesting models that were brought to bear on the issue. It is a timely and timeless book on an issue that is sure to resurface--and when it does, this is an excellent book to have in your collection."--Mark Sanders, British Journal of Industrial Relations