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Knowledge, Inequality and Growth in the New Economy

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Knowledge, Inequality and Growth in the New Economy

9781843763239 Edward Elgar Publishing
The late Richard Nahuis, formerly CPB Netherlands Bureau for Economic Policy Analysis and Utrecht School of Economics, Utrecht University, The Netherlands
Publication Date: 2004 ISBN: 978 1 84376 323 9 Extent: 400 pp
During the past two centuries, major technological breakthroughs such as the steam engine and electricity have acted as the catalysts for growth and have resulted in a marked increase in material well-being. The dominant technology today – information and communication technology (ICT) – does not seem to drive growth as effectively and has coincided with an apparent increase in wage inequality. This book provides explanations of these two characteristics of modern economies and analyses them from both an individual and integrated perspective.

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During the past two centuries, major technological breakthroughs such as the steam engine and electricity have acted as the catalysts for growth and have resulted in a marked increase in material well-being. The dominant technology today – information and communication technology (ICT) – does not seem to drive growth as effectively and has coincided with an apparent increase in wage inequality. This book provides explanations of these two characteristics of modern economies and analyses them from both an individual and integrated perspective.

Richard Nahuis explores and combines the seemingly separate phenomena of wage inequality between high-skilled and low-skilled workers, and the relatively low productivity growth experienced by most countries. The author provides a number of alternative theories for the increase in wage inequality as a result of new technologies, combined with an extensive review of the associated literature. He goes on to detail the technological revolution, describe why this does not necessarily result in high productivity growth and outline the best methods to measure productivity in the new economy.

This exhaustive exploration of productivity growth and wage inequality between high-skilled and low-skilled workers in the knowledge economy will be welcomed by economists and policymakers interested in the complex relationships between labour markets, innovation and technical change.
Critical Acclaim
‘In Knowledge, Inequality and Growth in the New Economy, Richard Nahuis succeeds in explaining different empirical trends from a common theoretical perspective. It is convincingly shown that the wage gap between skilled and unskilled workers and the productivity paradox related to the spread of computers can be explained by the introduction of a so-called general purpose technology. Working through the models is like undertaking a voyage of discovery with many beautiful sites. References to statistics and measurement problems serve as a compass to keep track of the real world. The rich content and the analytical skills of the author make reading and studying the book highly rewarding.’
– Theo van de Klundert, Tiburg University, Groningen University and CPB Netherlands Bureau for Economic Policy Analysis, The Netherlands

‘This is a well written, rigorous and useful book, tackling a very interesting issue; the economics of innovation in advanced industrial countries. It provides a clear analysis of the impact of the IT revolution on productivity and wage equality, and presents the arguments and conclusions in a comprehensive manner. The author demonstrates convincingly why new technology may lead to increasing wage inequality, nationally and internationally. There is a lot of interest in the effects of the IT revolution but none of the existing works deal with the underlying economic theory as well as Richard Nahuis.’
– The late Sanjaya Lall, Oxford University (at the International Development Centre at Queen Elizabeth House), UK
Contents
Contents: Part I: Introduction 1. Knowledge and Economic Growth: General Introduction and Outline 2. On Technology, Trade and Wage Inequality: A Survey Part II: Theory 3. A GPT in a Research and Assimilation Model: Exploring Wage Dynamics (I) 4. We Don’t See What We Learn: The Solow Residual, a GPT and Inequality 5. Vested Interests and Resistance: Adopting a General Purpose Technology 6. The Skill Premium and Appropriability: Exploring Wage Dynamics (II) 7. Specific Technology, Variety, Spillovers and Welfare Part III: Empirical Applications 8. Economic Development and Trade in the World Economy: Introducing WorldScan 9. Openness, Growth and R&D Spillovers: An R&D-Amended Version of WorldScan References Index

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