Technological Progress and the Distribution of Productivities across Sectors

This paper studies the impact of the process of technological change on the distribution of productivities and pro...ts across sectors. We ...nd that if technological progress a¤ects high-tech and traditional sectors di¤erently, the impact of changes in the determinants of economic growth may differ depending on which is the actual change. When an economy is growing faster due to an increase in the productivity of research or to a reduction of the taxes on capital accumulation, inequality will decrease. However, if faster growth is due to the presence of tax incentives to high technology sectors or to structural changes that allow a better absorption of externalities, inequality will increase. Regarding the e¤ect on growth of changes a¤ecting the distribution of productivities we ...nd that if the scope of technological spillovers is su¢ciently broad, a distribution with a larger mass of high-tech sectors is associated with a larger growth rate. Nevertheless, a larger mass of research intensive sectors is not necessarily associated with faster growth when spillovers are technology speci...c or narrow in scope. In this case, the mass of the leading group of sectors will not a¤ect the growth rate because the increased probability of innovation due to the larger mass of high-tech products is completely o¤set by the reduction in the marginal impact of an individual innovation.