Inequality, innovation and growth.

Summary Three dimensions of the technical progress hypothesis are explored. First, it is explained why, in the United States in particular, periods of strong growth in the skill premium have coincided with periods when the supply of skilled labor was lowest (1971-1979). In a model of endogenous growth with innovation, the bias toward individual ability increases intra-group inequality and reduces the incentive for ordinary-ability individuals to educate themselves. Growth based on technical progress biased in favour of individual capabilities thus amplifies the effects of the technological bias on wages through an insufficient response of the supply of skilled labour. Second, the analysis focuses on the cyclical nature of innovation and inequality in the long run. In a model where the choice of the sector in which researchers develop projects is endogenous, we show that innovators have an incentive to adopt technologies complementary to skilled or unskilled labor alternately. This alternation exerts a non-monotonic pressure on inequality, so a permanent bias is not robust in this framework. Third, the organizational dimension of technical progress is studied. The analysis developed focuses, on the one hand, on the determinants of organizational choices and on the relations between innovation, organization and market structure in a growth model. On the other hand, we explore the more microeconomic foundations of innovative organizational practices, i.e. the allocation of multiple productive tasks in an agency relationship, in order to highlight the interaction between multiskilling and incentive compensation. The main predictions of these two models are finally tested econometrically on French data from the 1997 survey "Organizational Change and Computerization".