On the one hand, technology may underpin globalisation and on the other, the increased competition that comes with globalisation may force firms to innovate. Innovation may raise labour income inequality both temporarily - since R&D is skill intensive (Dinopoulos and Segerstrom, 1999, Neary, 2003) - and permanently, provided it results in skill-biased technological change as discussed above (Acemoglu, 2002). Policies that foster equity in education lower income inequality by reducing the dispersion of earnings. The same applies to policies that promote upper secondary or tertiary education, at least in countries with an already high share of upper secondary or tertiary graduates, respectively, among the working-age population.