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Globalization and wage polarization

Cozzi, Guido; Impullitti, Giammario

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Guido Cozzi


In the 1980s and 1990s, the US labour market experiences a remarkable polarization along with fast technological catch-up, as Europe and Japan improve their global innovation performance. Is foreign technological convergence an important source of wage polarization? To answer this question, we build a multi-country Schumpeterian growth model with heterogeneous workers, endogenous skill formation and occupational choice. We show that convergence produces polarization through business stealing and increasing competition in global innovation races. Quantitative analysis shows that these channels can be important sources of US polarization. Moreover, the model delivers predictions on the US wealth-income ratio consistent with empirical evidence.


Cozzi, G., & Impullitti, G. (in press). Globalization and wage polarization. Review of Economics and Statistics, 98(5),

Journal Article Type Article
Acceptance Date Jul 18, 2015
Online Publication Date Nov 16, 2015
Deposit Date Jun 16, 2016
Publicly Available Date Jun 16, 2016
Journal Review of Economics and Statistics
Print ISSN 0034-6535
Electronic ISSN 1530-9142
Publisher Massachusetts Institute of Technology Press
Peer Reviewed Peer Reviewed
Volume 98
Issue 5
Keywords wage polarization, heterogeneous workers, wealth-income ratio, endogenous technical change, international technology competition, personal service sector
Public URL
Publisher URL
Contract Date Jun 16, 2016


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