2002/05/01 by Philippe Aghion · 266 citations
Economics, Econometrics and Finance · Social Sciences · #Economic Theory and Policy #Economic Growth and Productivity #Political Economy and Marxism #Economics #Wage inequality #Inequality #Wage #Labour economics #Economic inequality #Income distribution #Wage growth #Growth theory #Demographic economics #Neoclassical economics
paper · open access · doi:10.1111/1468-0262.00312
published in Econometrica 70(3), 855-882 (Wiley)
openalex publication_date 2002/05/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/29
In this lecture, it is argued that Schumpeterian Growth Theory, in which growth is driven by a sequence of quality-improving innovations, can shed light on two important puzzles raised by the recent evolution of wage inequality in developed economies. The first puzzle concerns wage inequality between educational groups, which has substantially risen in the US and the UK during the past two decades following a sharp increase in the supply of educated labor. The second puzzle concerns wage inequality within educational groups, which accounts for a large fraction of the observed increase in wage inequality, although in contrast to between-group wage inequality it has mainly affected the temporary component of income.