Innovation, innovation systems and income inequality: a study of causal mechanisms

Fragkandreas, Athanasios (2021) Innovation, innovation systems and income inequality: a study of causal mechanisms. PhD thesis, Birkbeck, University of London.

Abstract

Over the past three decades, an increasing number of contributions have confirmed that innovation (i.e., the development of socio-economic significant combinations of resources) is, either on its own or in conjunction with other structural forces (e.g., declining union membership, deregulation, financialisation, neoliberal policies and welfare state retrenchment), a major determinant behind the surge in income inequality (i.e., unequal distribution of income) in contemporary society. This thesis makes an essential contribution to our understanding of how innovation shapes the distribution of income. Specifically, by mapping out and reviewing, in a systematic manner, the current stock of knowledge on innovation and income inequality in the social sciences, this thesis structures our understanding of three decades of research on innovation and inequality, whilst also developing a typology of eight causal mechanisms. Furthermore, and in contrast with the bulk of existing studies on innovation and income inequality, which are informed by the labour economic theory in general, and the skill-biased technological change account in particular, this thesis is among the first to systematically investigate the causal mechanisms through which collectivities of innovating actors – such as innovation systems – exercise a causal impact on the distribution of income. To do so, the present thesis advances an original conceptual model based on an integration of key theoretical insights from the literature on innovation systems, relational inequality theory, and critical realism. Based on an in-depth mixed-method case study analysis of a regional innovation system in Germany, the analysis identifies seven causal mechanisms through which systemic interactions among focal actors in the innovation process (e.g., firms, research institutes, universities, policy-makers, etc.) affect the distribution of income. These are as follows: five inequality-inducing causal mechanisms (i.e., regional competence concentration, concentrated income extraction, skill premiums, precarious employment, old age technological unemployment), and two inequality-reducing causal mechanisms (i.e., gender-inclusive competence-building and employment). The causal explanatory ability of the case study analysis in this thesis is also supported through a dialectical analysis of the paradoxical status of case study research within the field of innovation systems studies. The thesis ends by discussing key findings, limitations, and analytical and policy implications, some of which touch upon the ability of innovation systems research to inform a new generation of innovation policies focused on grand societal challenges such as rising inequality.

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