Endogenous task-based technical change—factor scarcity and factor prices

Authors

  • Andreas Irmen

DOI:

https://doi.org/10.18559/ebr.2020.2.6

Keywords:

economic growth, endogenous technical change, direction of technical change, biased technology

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 factorsaving in the sense of Acemoglu (2010). Nevertheless, labour scarcity induces labour 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 microfoundation for canonical macro-economic models. Moreover, it accommodates features like endogenous factor supplies and a binding minimum wage.

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Published

2020-06-30

Issue

Section

Research article- regular issue

How to Cite

Irmen, A. (2020). Endogenous task-based technical change—factor scarcity and factor prices. Economics and Business Review, 6(2), 81-118. https://doi.org/10.18559/ebr.2020.2.6

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