Download This PaperEndogenous Task-Based Technical Change - Factor Scarcity and Factor Prices -
39 Pages Posted: 15 Apr 2020
Date Written: 2020
Abstract
This paper develops a static model of endogenous task-based technical progress to study how factor scarcity induces technological progress and changes in factor prices. The equilibrium technology is multi-dimensional and not strongly factor-saving in the sense of Acemoglu (2010). Nevertheless, labor scarcity induces labor productivity growth. There is a weak but no strong absolute equilibrium bias. This model provides a plausible interpretation of the famous contention of Hicks (1932) about the role of factor prices and factor endowments for induced innovations. It may serve as a micro-foundation for canonical macro-economic models. Moreover, it accommodates features like endogenous factor supplies and a binding minimum wage.
Keywords: economic growth, endogenous technical change, direction of technical change, biased technology
JEL Classification: O310, D920, O330, O410
Suggested Citation: Suggested Citation
CESifo (Center for Economic Studies and Ifo Institute for Economic Research), Munich
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