Innovation and Income Inequality in the USA: Ceremonial versus Institutional Changes

Abstract

This article investigates the distributive effects of technological progress in the United States during the last four decades. The result of our econometric analysis reveals that the shift in R&D investment from the public to the private sector was associated with an increase in income share of the richer classes at the expense of the poorer income classes. Taking an institutionalist perspective, these findings can be explained by ceremonial encapsulation of innovation by corporate capital that slows the pace of social progress. In this context, diffusion of innovation may be treated as a progressive institutional change.