This project explores the relationship between consumption inequality and innovation. It asks whether economic inequality affects the kind of innovation that takes place and who benefits from that innovation. Using scanner data, the researcher’s preliminary findings show that the difference in inflation rates across the income distribution can be accurately measured only with product-level data, not by simply reweighting aggregate price series based on income-specific spending shares, as the U.S. Bureau of Labor Statistics does. The findings could therefore have methodological as well as policy implications.
Xavier Jaravel is a Ph.D. candidate in Business Economics at Harvard University and Harvard Business School who is working on topics of relevance for macroeconomics, with a particular interest in innovation policy. He is currently a visiting researcher at the Stanford Institute for Economic Policy Research (SIEPR). His work examines the social and economic processes that generate innovation and distribute its rewards in society, in the context of the United States over the past twenty years.
Do product innovations affect economic inequality? In a new working paper published today, I find that shifts in income distribution in the United States lead to product innovations that target […]