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International R&D Spillover and Inequality

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Abstract

This paper examines the role of knowledge spillover across countries as well as skilled labor supply and openness in determining wage inequality. A basic general equilibrium model of long run relations linking endogenous growth and wage inequality is analyzed. Our empirical work for the determinants of inequality is based on a panel data for 5-year time periods for 20 developed countries over the 1970-1990 period. The estimations are carried out with non-linear models as well as linear models. The inequality phenomena in the developed countries can be well explained by knowledge spillover across countries.

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