Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/216611 
Authors: 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8215
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
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 factor-saving in the sense of Acemoglu (2010). Nevertheless, labor scarcity induces labor 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 micro-foundation for canonical macro-economic models. Moreover, it accommodates features like endogenous factor supplies and a binding minimum wage.
Subjects: 
economic growth
endogenous technical change
direction of technical change
biased technology
JEL: 
O31
D92
O33
O41
Document Type: 
Working Paper
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