2025/08/05 by Nick O’Donovan · 1 voice
Economics, Econometrics and Finance · #Labor market dynamics and wage inequality #Economic Theory and Policy #Economic Growth and Productivity
paper · pdf · doi:10.1093/ser/mwaf052
Abstract In the 1990s, policymakers in affluent democracies viewed the ‘knowledge economy’ as a solution to economic stagnation and social exclusion. Yet, in many of these countries, the period from the mid-1990s to the mid-2020s has instead been associated with lacklustre levels of growth and widening inequalities. This article explores four potential explanations for growth trends during this period: skill-biased technological change, intellectual property monopoly, divergent national growth models, and automation. Using data from fourteen advanced democracies, it examines national-level transitions to and through the knowledge economy between 1995 and 2019, assessing how differences in inequality and prosperity trajectories link to differences in the knowledge-intensive industries in which different countries have specialized. It highlights how the inequality impacts of particular sectoral specialisms have changed as knowledge economies mature, with important implications for understanding the trajectories of different national growth models, and the possible effects of new technologies such as artificial intelligence on labour and capital in the near future.