Factor Reallocation and Growth: What if There Are Labor Saving Innovations?

13 Pages Posted: 27 Jun 2019

See all articles by Hernando Zuleta

Hernando Zuleta

Universidad de los Andes, Colombia

Daniel Gamboa

Universidad de los Andes, Colombia

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

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

Hernando Zuleta (Contact Author)

Universidad de los Andes, Colombia ( email )

Carrera Primera # 18A-12
Bogota, DC D.C. 110311
Colombia

Daniel Gamboa

Universidad de los Andes, Colombia ( email )

Carrera Primera # 18A-12
Bogota, DC D.C. 110311
Colombia

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