Some Income Distributional Effects of Technical Change.

Finis Welch

Expert InsightsPublished 1976

Evidence suggests that introduction of Green Revolution high yielding seed varieties has resulted in increased income inequality among farm families. The scale free nature of information is a possible explanation of this phenomenon. Even if new methods are not technologically biased toward larger firms, they will be informationally biased unless evolution costs are proportionate to scale. A model is developed in which evaluation costs are independent of scale and implications for the dynamics and income distributional change are pursued. Two cases are considered: (1) An unanticipated once-for-all stock in available methods occurs. In this case, larger firms enjoy quasi-rents until adoption cycle is completed. (2) Steady advance with new techniques arriving at a fully anticipated rate. The equilibrium this case generates includes larger firms than would exist in a static environment, and the set of productive factors is expanded to include skills for management of larger scale and adoption of new techniques. 16 pp.

Document Details

  • Copyright: RAND Corporation
  • Availability: Web Only
  • Year: 1976
  • Pages: 16
  • Document Number: P-5699

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Welch, Finis, Some Income Distributional Effects of Technical Change. Santa Monica, CA: RAND Corporation, 1976. https://www.rand.org/pubs/papers/P5699.html.
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