Download This PaperFactor Reallocation and Growth: What if There Are Labor Saving Innovations?
13 Pages Posted: 27 Jun 2019
Date Written: February 6, 2019
Abstract
We claim that the standard methodology to study the effects of the reallocation of factors on growth is not adequate in the presence of biased innovations. Labor-saving innovations increase output per worker and may decrease the marginal productivity of labor. Therefore, a reallocation of labor from a sector with higher output per worker to a sector with lower output per worker may be productivity enhancing.
Keywords: factor reallocation, capital using and labor saving innovations, factor income shares, structural change
JEL Classification: D33, O11, O31, O33, J30
Suggested Citation: Suggested Citation
Zuleta, Hernando and Gamboa, Daniel, Factor Reallocation and Growth: What if There Are Labor Saving Innovations? (February 6, 2019). Documento CEDE No. 2019-12, Available at SSRN: https://ssrn.com/abstract=3410451 or http://dx.doi.org/10.2139/ssrn.3410451
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