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Income inequality and technological progress: The effect of R&D incentives, integration, and spillovers
Author(s) -
Osório António,
Pinto Alberto
Publication year - 2020
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/jpet.12466
Subject(s) - economics , incentive , spillover effect , competition (biology) , economic inequality , income distribution , inequality , product market , distribution (mathematics) , technological change , labour economics , capital (architecture) , legislation , market economy , microeconomics , macroeconomics , history , ecology , mathematical analysis , mathematics , archaeology , political science , law , biology
Recent years witnessed an increase in income inequality. Several explanations have been put forward. In the present paper, we consider a series of technologically related events that have been crucial for the increased income inequality, that is, public R&D incentives, increasing horizontal integration and spillover effects. We found that public R&D incentives and the increasing horizontal integration have biased the income distribution towards the top income group. In particular, the high‐skilled workers involved in the R&D process have benefited enormously from this process. Similarly, capital owners have seen an increase in their profits, because of the reduction in product market competition and technological improvements in the production process. We found the effect of knowledge spillovers to be less clear‐cut. We conclude discussing the implications of our results and suggesting possible solutions to the increasing income inequality. We call for the creation of supranational institutions, and for stricter legislation on competition and antitrust policy.