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@TechReport{RePEc:fip:fedhwp:95159,
  author={Gustavo de Souza},
  title={{The Labor Market Consequences of Appropriate Technology}},
  year=2022,
  month=Sep,
  institution={Federal Reserve Bank of Chicago},
  type={Working Paper Series},
  url={https://ideas.repec.org/p/fip/fedhwp/95159.html},
  number={WP 2022-53},
  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%},
  keywords={appropriate technology; directed technological change; innovation},
  doi={10.21033/wp-2022-53},
}

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