The Product Cycle and Inequality

Boyan Jovanovic

NBER Working Paper No. 10910
Issued in November 2004
NBER Program(s):   EFG   PR

This paper models the product cycle and explains how it relates to world inequality. In the model, both phenomena arise because skilled people have a comparative advantage in making high-tech products. The model can explain up to a 10:1 income differential between people and up to a 7:1 differential between countries.

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