Academic journal article International Advances in Economic Research

Concerning Inequality, Technology Adoption, and Structural Change

Academic journal article International Advances in Economic Research

Concerning Inequality, Technology Adoption, and Structural Change

Article excerpt

JEL E00 * O10 * O57

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Empirical evidence suggests that there has been a divergence over time in income distributions across countries and within countries. There is strong evidence to suggest an emergence of "twin-peaks" in cross-sectional world income distributions, and also this type of polarization is present in income distributions within countries (Quah, Journal of Economic Growth, 1997; Sala-i-Martin, Quarterly Journal of Economics, 2006). Furthermore, developing economies show a great deal of diversity in their growth patterns during the process of economic development. For example, some of these countries converge rapidly on the leaders, while others stagnate or even experience reversals and declines in their growth processes.

In this paper, we study a simple two-period, overlapping-generations model of endogenous growth with household specific costs of technology adoption, and income and wealth heterogeneity which is consistent with these stylized facts. In particular, our model has some features in common with the models used in the literature on barriers to technology adoption (Khan and Ravikumar, Review of Economic Dynamics, 2002; Greenwood and Jovanovic, Journal of Political Economy, 1990). The model of Khan and Ravikumar (2002), uses an "AK" specification for technologies used, and has a fixed cost associated with adopting more productive technologies. …

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