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. and we show how these factors vary systematically across different consumer groups. Economic developments of the 1980s and 1990s have brought increasing disagreement about the performance of the American and European economies. Economists typically try to account for these dual and contrasting perspectives by citing the increasing gap between the wages of skilled and unskilled labor. We examine differential consumer gains as another factor which may account for the contrasting perspectives. Differential consumer gains can also help to explain contrasting perspectives on the de-socialization of the East European and Soviet economies.