Essays on Innovation, Growth, and Inequality

This thesis studies three essential topics in growth, innovation, and inequality. First, we propose a model to describe the relationship between the productivity of two kinds of workers (highly and low-skilled) and economic growth along the "creative destruction" concept. Our results reveal that the social planner intervention is efficient in allocating economic resources when unskilled labour productivity is very low. However, highly and low-productive skilled labour and highly productive unskilled labour do not involve such intervention due to the efficiency of a decentralized economy to achieve the desired growth. Next, using the Generalized Method of Moments (GMM) and Two-Stage Least squares (TSLS)-Heteroskedasticity methods, we study the impact of innovation on income inequality in the European cross-regional panel data. We find that innovation decreases income inequality in general but increases the gap in the top of the income distribution. Finally, we examine the effect of innovation on wage inequality and different wage shares in the UK regions by using British Household Panel Survey (BHPS) data. We utilize parametric and non-parametric approaches to find where innovation has the highest effect on wage distribution. The results show that innovation increases the general measures of wage inequality, while it does not show any impact on the top and the bottom wage shares.