Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/272812 
Year of Publication: 
2022
Series/Report no.: 
Working Paper No. WP 2022-53
Publisher: 
Federal Reserve Bank of Chicago, Chicago, IL
Abstract: 
Developing countries rely on technology created by developed countries. This paper demonstrates that such reliance increases wage inequality but leads to greater production in developing countries. I study a Brazilian innovation program that taxed the leasing of international technology to subsidize national innovation. I show that the program led firms to replace technology licensed from developed countries with in-house innovations, which led to a decline in both employment and the share of high-skilled workers. Using a model of directed technological change and technology transfer, I find that increasing the share of firms that patent in Brazil by 1 p.p. decreases the skilled wage premium by 0.02% and production by 0.2%.
Subjects: 
appropriate technology
directed technological change
innovation
JEL: 
O11
O33
O38
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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