Labor- and Capital-Augmenting Technical Change

By Daron Acemoglu. 2000

788 citations recorded by the source corpus.

I analyze an economy in which profit-maximizing firms can undertake both labor- or capital-augmenting technological improvements. In the long run, the economy looks like the standard growth model with purely labor-augmenting technical change, and the share of labor in GDP is constant. Along the transition path, however, there is capital-augmenting technical change and factor shares change. A range of policies may have counterintuitive implications due to their effect on the direction of technical change. For example, taxes on capital income reduce the labor share in the short run, but increase it in the medium/long run.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/99468878a795f411f24d95fd7d98456f906109ba

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Citations in the corpus

Directed Technical Change as a Response to Natural Resource Scarcity (2021, background): “6 More general technologies and market settings are studied—e.g., in Acemoglu (2002, 2003, 2007).”
The Effects of Technical Change on Labor Market Inequalities (2004, neutral): “Recently, Acemoglu (1998, 2002b, 2003b) and Kiley (1999) have developed the idea that the direction of innovations is also endogenous: if R&D activity can be purposefully directed towards productivity improvements of different inputs (capital, skilled labor, and unskilled labor), then it will be…”
Capital Deepening and Nonbalanced Economic Growth (2008, neutral): “Comparing these (derived) production functions to (1) and (2) highlights that in this economy, the production functions G1 and G2 from the previous section take Cobb-Douglas forms, with one sector always having a higher share of capital than the other sector, and also that A1 =M 1 ν−1 1 and A2 =M 1 ”
Income Distribution and Demand-Induced Innovations (2006, positive): “How do the prices for a differentiated product evolve along this path? To get an answer to this question we use the first two lines in equation (3).”
The Rise and Decline of General Laws of Capitalism (2015, background): “One reason why the long-run elasticity of substitution might be greater than 1 is the endogeneity of technology (e.g., Acemoglu, 2002, 2003).”
Growth, capital shares, and a new perspective on production functions (2003, methodology): “This is the approach taken originally by Kennedy (1964), Samuelson (1965), and Drandakis and Phelps (1966) and examined recently using the tools of new growth theory by Acemoglu (2001).”
How Destructive Is Innovation? (2019, neutral): “http://www.econometricsociety.org/ Econometrica, Vol. 87, No. 5 (September, 2019), 1507–1541”
Equilibrium Bias of Technology (2007, background): “Yet another interesting generalization might be to integrate some of these results into growth models where there can be long-run growth due to technological change (see Acemoglu, 1998, 2002, 2003b or Jones, 2005, for various growth models with relative equilibrium bias).”
Innovation by Leaders (2004, neutral): “I benefited from interesting comments by Daron Acemoglu, Philippe Aghion, Karina Firme, David Laibson, Greg Mankiw, Indira Pottebaum, Jennifer Reinganum, Joseph Zeira, two anonymous referees and seminar participants at M.I.T. and Harvard University. This paper was written at the National Bureau of E”
Accounting for Cross-Country Income Differences (2004, neutral): “, Heckman and Klenow (1997) and Acemoglu and Angrist (2000). (39)See, e.g., Murphy, Shleifer, and Vishny (1991), or Gelb, Knight, and Sabot (1991).”
Explaining Movements in the Labor Share (2003, methodology): “Recently Blanchard (1997,1998), Caballero and Hammour (1998), Acemoglu (2003), and Blanchard and Giavazzi (2003) have examined various aspects of the labor share. On the other hand, Galí and Gertler (1999) have used the labor share as a measure of marginal costs in New Keynesian Phillips curves. See”
Capital Deepening and Non-Balanced Economic Growth (2008, neutral): “Acemoglu (2003) presents a model with non-balanced technological progress between two sectors, but in the limiting equilibrium both sectors grow at the same rate.”