The influence of technological change on the structure of the functional distribution of income

Abstract

Relevance. The link between innovation and distribution, the analysis of the distribution effects of technological change is one of the most factors of conducting effective state economic policy. It is a crucial element in the link between supply and demand in the economic development and growth process. Purpose. This article investigates the dynamics of wages and profits and the influence innovation strategies have on them and the priority directions of economic policy of the state. Methods. The following methods have been selected by the authors as scientific tools for this study: empirical, statistical methods and general theoretical methods: analysis and synthesis, systematization, generalization, comparative analysis, scientific abstraction, induction and deduction. Results. Innovation is found to have positive effects on income dynamics beyond the role it has on productivity gains; it may weaken the distribution constraint posed by the competition between profits and wages. Profits are driven by both the innovation effects of new products and the diffusion effects of new technologies and production processes. Wages tend to grow faster in high-innovation sectors where innovation expenditure is higher. Sectorial regularities in innovation and income dynamics are strong and persistent. Policy should recognize these simple facts and move toward selective industrial and innovation policies favoring structural change, the expansion of more dynamic sectors, and a strategy of technological competitiveness aimed at the development of new knowledge, competence, products, and markets. Possibilities of using. The received conclusions will be useful to researchers in the field of income distribution and wage and profit dynamics analysis and the innovation influence on them.

Keywords

• innovation
• wage
• profit
• income distribution
• state economic policy
• factor