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A Behavioral-Institutional Model of Endogenous Growth and Induced Technical Change

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  • Morris Altman

Abstract

Technological change is modeled as endogenous in the sense that it is affected by economic, behavioral, and institutional variables. Technological change is especially affected by changes in relative input prices and their level, of which the price of labor is particularly important. Input prices are affected by institutional variables. Such prices also impact on the firm's efficiency, which in turn affects growth rates as well as the rate of technical change. As relative factor prices or their level increase, firms are induced to innovate or adopt extant technology to remain competitive or to maintain current profit rates. High wage firms can be expected to engage in such induced technological change, leading the growth process thereby yielding lower unit costs and increasing the level of material welfare. Relatively low wage economies can be locked into a state of economic inefficiency and laggard technological progress, especially in the long run.

Suggested Citation

  • Morris Altman, 2009. "A Behavioral-Institutional Model of Endogenous Growth and Induced Technical Change," Journal of Economic Issues, Taylor & Francis Journals, vol. 43(3), pages 685-714.
    • Handle: RePEc:mes:jeciss:v:43:y:2009:i:3:p:685-714
    DOI: 10.2753/JEI0021-3624430306
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    Cited by:

    1. Altman, Morris, 2014. "Cooperative organizations as an engine of equitable rural economic development," Working Paper Series 3625, Victoria University of Wellington, School of Economics and Finance.
    2. Mehmet Ugur, 2013. "Governance, market power and innovation: evidence from OECD countries," Chapters, in: Mehmet Ugur (ed.), Governance, Regulation and Innovation, chapter 2, pages 25-57, Edward Elgar Publishing.
    3. Teraji, Shinji, 2011. "An economic analysis of social exclusion and inequality," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(3), pages 217-223, May.
    4. Altman, Morris, 2014. "Insights from behavioral economics on how labor markets work," Working Paper Series 18843, Victoria University of Wellington, School of Economics and Finance.
    5. Ugur, Mehmet, 2012. "Market Power, Governance and Innovation: OECD Evidence," MPRA Paper 44141, University Library of Munich, Germany.
    6. Altman, Morris, 2014. "Insights from behavioral economics on how labor markets work," Working Paper Series 3466, Victoria University of Wellington, School of Economics and Finance.
    7. Orlando Gomes, 2020. "Optimal growth under socially responsible investment: a dynamic theoretical model of the trade-off between financial gains and emotional rewards," International Journal of Corporate Social Responsibility, Springer, vol. 5(1), pages 1-17, December.

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