Directed Technical Change in Labor and Environmental Economics

45 Pages Posted: 18 Feb 2021

See all articles by David Hémous

David Hémous

University of Zürich; Centre for Economic Policy Research (CEPR)

Morten Olsen

University of Copenhagen

Multiple version iconThere are 3 versions of this paper

Date Written: January 21, 2021


It is increasingly evident that the direction of technological responds to economic incentives. We review the literature on directed technical change in the context of environmental economics and labor economics, and show that these fields have much in common both theoretically and empirically. We emphasize the importance of a balanced growth path. We show that the lack of such a path is closely related to the slow development of green technologies in environmental economics and growing inequality in labor economics. We discuss whether the direction of innovation is efficient.

Keywords: Endogenous growth, automation, directed technical change, climate change, income inequality.

JEL Classification: O31, O33, O41, O44, E25, J24, Q55.

Suggested Citation

Hemous, David and Olsen, Morten, Directed Technical Change in Labor and Environmental Economics (January 21, 2021). Available at SSRN: or

David Hemous

University of Zürich ( email )


Centre for Economic Policy Research (CEPR)

United Kingdom

Morten Olsen (Contact Author)

University of Copenhagen ( email )


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