Technical Change and Factor Shares

44 Pages Posted: 8 Mar 2001

See all articles by John J. Seater

John J. Seater

Economics Dept., Boston College

Date Written: January 2001


Theimplications of technical change that directly alters factor shares are examined. Such change can lower the income of some factors of production even when it raises total output, thus offering a possible explanation for episodes of social conflict such as the Luddite uprisings in 19th century England and the recent divergence in the U. S. between wages for skilled and unskilled labor. An explanation also why underdeveloped countries do not adopt the latest technology but continue to use outmoded production methods. Total factor productivity is shown to be a misleading measure of technical progress. Share-altering technical change brings into question the plausibility of a wide class of endogenous growth models.

Keywords: Technical change, factor shares, adoption of new technology

JEL Classification: O33, O4

Suggested Citation

Seater, John J., Technical Change and Factor Shares (January 2001). Available at SSRN: or

John J. Seater (Contact Author)

Economics Dept., Boston College ( email )

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Chestnut Hill, MA 02467
United States

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