Title: Technological intensity and inter-sectoral dynamics of inequality: evidence from the OECD, 1970-1990

Authors: Pedro Conceicao, James K. Galbraith

Addresses: Center for Innovation, Technology and Policy Research, IST, Lisbon, Portugal. Lyndon B. Johnson School of Public Affairs, the University of Texas at Austin, Austin, Texas, USA

Abstract: Conceicao [1] found empirical support for a relationship between levels of GDP per capita and levels of inequality conforming to an augmented Kuznets curve, corresponding to a cubic augmentation of the traditional quadratic functional form first proposed by Kuznets [2]. Inspired by Galbraith [3], we analyse the dynamics of inequality dividing, for each country, the industries into two sectors those that are more technologically intensive are part of the K (for knowledge) sector, with the remaining industries being part of the C (for consumption) sector. We find that the between K and C sectors component of inequality is positively associated with income per capita, the within C sector component is negatively associated with income, and that the K sector component follows a cubic relationship similar to the augmented Kuznets hypothesis. These results help to understand the drivers of the dynamics of overall inequality. As a country grows richer, the earnings in the K sector increase relatively to the C sector. This description of the dynamics of inequality, and its relationship with technology, differs from the skill-biased technological change hypothesis, since technology is not considered to be a ||radio wave|| affecting inequality through the mediation of returns to skills, but rather is considered to be a fundamental, characteristic, differentiating industries in the way they generate profits and earnings.

Keywords: inequality; technological change; technological intensity; economic growth; Kuznets hypothesis.

DOI: 10.1504/IJTPM.2002.001772

International Journal of Technology, Policy and Management, 2002 Vol.2 No.3, pp.315-337

Published online: 14 Dec 2003 *

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