Income Inequality and Technological Progress: A Perspective from Industrial Organization

Posted by Social Science Research Network

Income Inequality and Technological Progress: A Perspective from Industrial Organization

Manuela Magalhães (University of Alicante) & António M. Osório C. (Universitat Rovira i Virgili)
Abstract:      Recent years have witness an increasing income inequality. Several explanations have been put forward to account for this phenomenon. In the present paper we argue that a series of technological related events have been crucial to this process. In particular, increasing public R&D incentives and horizontal integration have favored capital returns and high-skilled workers income. The effect of knowledge spillovers is less clear. Nonetheless, we argue that in order to protect their interests the capital owners lobby employed a series of spillover appropriation mechanisms that did not allow reductions in income inequality to be more than temporary exceptions. We conclude claiming for the creation of new supranational institutions, and more strict legislation, competition and antitrust policies.