American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Technology Gaps, Trade, and Income
American Economic Review
vol. 113,
no. 2, February 2023
(pp. 472–513)
Abstract
This paper quantifies the contribution of technology gaps to international income inequality. I develop an endogenous growth model where cross-country differences in R&D efficiency and cross-industry differences in innovation and adoption opportunities together determine equilibrium technology gaps, trade patterns, and income inequality. Countries with higher R&D efficiency are richer and have comparative advantage in more innovation-dependent industries. I calibrate R&D efficiency by country and innovation dependence by industry using R&D, patent, and bilateral trade data. Counterfactual analysis implies technology gaps account for one-quarter to one-third of nominal wage variation within the OECD.Citation
Sampson, Thomas. 2023. "Technology Gaps, Trade, and Income." American Economic Review 113 (2): 472–513. DOI: 10.1257/aer.20201940Additional Materials
JEL Classification
- D21 Firm Behavior: Theory
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D31 Personal Income, Wealth, and Their Distributions
- F14 Empirical Studies of Trade
- O31 Innovation and Invention: Processes and Incentives
- O33 Technological Change: Choices and Consequences; Diffusion Processes
- O47 Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence