Bandeira, Ana M.Afonso, Oscar2014-01-162014-01-162013(Afonso and Bandeira, 2013)978-4-385-60345-2http://hdl.handle.net/10400.22/3322This paper studies the effects of the diffusion of a General Purpose Technology (GPT) that spreads first within the developed North country of its origin, and then to a developing South country. In the developed general equilibrium growth model, each final good can be produced by one of two technologies. Each technology is characterized by a specific labor complemented by a specific set of intermediate goods, which are enhanced periodically by Schumpeterian R&D activities. When quality reaches a threshold level, a GPT arises in one of the technologies and spreads first to the other technology within the North. Then, it propagates to the South, following a similar sequence. Since diffusion is not even, neither intra- nor inter-country, the GPT produces successive changes in the direction of technological knowledge and in inter- and intra-country wage inequality. Through this mechanism the different observed paths of wage inequality can be accommodated.engNorth-SouthGeneral purpose technologyDirection of technological knowledgeWage inequalityjournal article10400.22/3322