Winners and losers in a knowledge-based economy: investigating the policy packages for an inclusive growth based on a computable general equilibrium analysis of Korea

Abstract

This study proposes a conceptual framework to investigate the economy-wide impacts of factor-biased technological change and the role of policy packages to spur inclusiveness of the economy. Based on this conceptual framework, this study explores the impacts of proposed policy-mixes in terms of growth and distribution using a computable general equilibrium (CGE) model. The results show that the policy package consisting of innovation, education, and taxation policies has the potentials to serve as a policy option to achieve the inclusive growth. Our simulation results suggest that governments should adapt tax systems for the inclusive growth and adjustment mechanisms to help workers navigate sufficient opportunities for skill accumulation, and to facilitate technological innovation within the economic system. Our results shed light on the importance of the policy packages in resolving the side effects of factor-biased technological progress and spur the inclusive growth in the knowledge-based economy.