WHO BENEFITS FROM PROGRESS

Progress is better for some consumers than for others. We analyze the factors which govern how much a consumer gains from progress, defined as price declines and the introduction of new and improved products. a nd we show how these factors vary systematically across different cons umer groups. Economic developments of the 1980s and 1990s have brought increasing disagreement about the performance of the American and Eur opean economies. Economists typically try to account for these dual an d contrasting perspectives by citing the increasing gap between the wa ges of skilled and unskilled labor. We examine differential consumer g ains as another factor which may account for the contrasting perspecti ves. Differential consumer gains can also help to explain contrasting perspectives on the de-socialization of the East European and Soviet e conomies.