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Induced Innovation, Endogenous Technical Change and Income Distribution in a Labor-Constrained Model of Classical Growth

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  • Luca Zamparelli

Abstract

We present a steady state analysis of a labor-constrained classical growth model with endogenous direction and intensity of technical change. Firms use retained profits to raise their productive capacity and to improve labor and capital productivities. Investments are planned to maximize instantaneous profits. Comparative dynamics exercises show that (1) an increase in the saving rate and in R&D subsidies raises the steady state labor share, labor productivity growth and the employment rate, and (2) a rise in workers' bargaining power reduces the employment rate while leaving productivity growth and distribution unaffected.

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  • Luca Zamparelli, 2015. "Induced Innovation, Endogenous Technical Change and Income Distribution in a Labor-Constrained Model of Classical Growth," Metroeconomica, Wiley Blackwell, vol. 66(2), pages 243-262, May.
    • Handle: RePEc:bla:metroe:v:66:y:2015:i:2:p:243-262
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    Cited by:

    1. Naqvi, Asjad & Stockhammer, Engelbert, 2018. "Directed Technological Change in a Post-Keynesian Ecological Macromodel," Ecological Economics, Elsevier, vol. 154(C), pages 168-188.
    2. Rada, Codrina & Tavani, Daniele & von Arnim, Rudiger & Zamparelli, Luca, 2023. "Classical and Keynesian models of inequality and stagnation," Journal of Economic Behavior & Organization, Elsevier, vol. 211(C), pages 442-461.
    3. Lucrezia Fanti, 2018. "An AB-SFC Model of Induced Technical Change along Classical and Keynesian Lines," Working Papers 3/18, Sapienza University of Rome, DISS.
    4. Stamegna, Marco, 2022. "Wage inequality and induced innovation in a classical-Marxian growth model," MPRA Paper 113805, University Library of Munich, Germany.
    5. Jose Barrales‐Ruiz & Ivan Mendieta‐Muñoz & Codrina Rada & Daniele Tavani & Rudiger von Arnim, 2022. "The distributive cycle: Evidence and current debates," Journal of Economic Surveys, Wiley Blackwell, vol. 36(2), pages 468-503, April.
    6. Daniele Tavani & Luca Zamparelli, 2017. "Endogenous Technical Change In Alternative Theories Of Growth And Distribution," Journal of Economic Surveys, Wiley Blackwell, vol. 31(5), pages 1272-1303, December.
    7. Daniele Tavani & Luca Zamparelli, 2017. "Government spending composition, aggregate demand, growth, and distribution," Review of Keynesian Economics, Edward Elgar Publishing, vol. 5(2), pages 239-258, April.
    8. Jose Barrales-Ruiz, Ivan Mendieta-Muñoz, Codrina Rada, Daniele Tavani, Rudiger von Arnim, 2020. "The distributive cycle: Evidence and current debates," Working Paper Series, Department of Economics, University of Utah 2020_07, University of Utah, Department of Economics.
    9. Mariolis Theodore & Konstantakis Konstantinos N. & Michaelides Panayotis G. & Tsionas Efthymios G., 2019. "A non-linear Keynesian Goodwin-type endogenous model of the cycle: Bayesian evidence for the USA," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 23(1), pages 1-16, February.
    10. Eric Kemp-Benedict, 2022. "A classical-evolutionary model of technological change," Journal of Evolutionary Economics, Springer, vol. 32(4), pages 1303-1343, September.
    11. Lucrezia Fanti, 2021. "‘Kaldor Facts’ and the decline of Wage Share: An agent based-stock flow consistent model of induced technical change along Classical and Keynesian lines," Journal of Evolutionary Economics, Springer, vol. 31(2), pages 379-415, April.
    12. Manuel David Cruz & Daniele Tavani, 2022. "Secular Stagnation: A Classical-Marxian View," Working Papers PKWP2229, Post Keynesian Economics Society (PKES).
    13. Tavani, Daniele & Zamparelli, Luca, 2021. "Labor-augmenting technical change and the wage share: New microeconomic foundations," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 27-34.
    14. Cruz, Manuel David, 2023. "Labor Productivity, Real Wages, and Employment in OECD Economies," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 367-382.
    15. Daniele Tavani, 2023. "The Classical Model of Growth and Distribution," Working Papers 2311, New School for Social Research, Department of Economics.
    16. Stamegna, Marco, 2022. "Induced innovation, the distributive cycle, and the changing pattern of labour productivity cyclicality: a SVAR analysis for the US economy," MPRA Paper 113855, University Library of Munich, Germany.
    17. Stamegna, Marco, 2022. "A Kaleckian growth model of secular stagnation with induced innovation," MPRA Paper 113794, University Library of Munich, Germany.

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