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When Does Labor Scarcity Encourage Innovation?

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  • Daron Acemoglu

Abstract

This paper studies whether labor scarcity encourages technological advances, that is, technology adoption or innovation, for example, as claimed by Habakkuk in the context of nineteenth-century United States. I define technology as strongly labor saving if technological advances reduce the marginal product of labor and as strongly labor complementary if they increase it. I show that labor scarcity encourages technological advances if technology is strongly labor saving and will discourage them if technology is strongly labor complementary. I also show that technology can be strongly labor saving in plausible environments but not in many canonical macroeconomic models.

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File URL: http://www.jstor.org/stable/full/10.1086/658160
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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 118 (2010)
Issue (Month): 6 ()
Pages: 1037 - 1078

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Handle: RePEc:ucp:jpolec:doi:10.1086/658160

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  1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  2. Ethan Lewis, 2005. "Immigration, skill mix, and the choice of technique," Working Papers 05-8, Federal Reserve Bank of Philadelphia.
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  6. Daron Acemoglu, 2001. "Directed Technical Change," NBER Working Papers 8287, National Bureau of Economic Research, Inc.
  7. Alberto Alesina & Joeph Zeira, . "Technology and Labor Regulations," Working Papers 0729, University of Crete, Department of Economics.
  8. Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February.
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  10. Hellwig, Martin & Irmen, Andreas, 2001. "Endogenous Technical Change in a Competitive Economy," Journal of Economic Theory, Elsevier, vol. 101(1), pages 1-39, November.
  11. Acemoglu, Daron & Zilibotti, Fabrizio, 2000. "Productivity Differences," CEPR Discussion Papers 2498, C.E.P.R. Discussion Papers.
  12. David Popp, 2002. "Induced Innovation and Energy Prices," American Economic Review, American Economic Association, vol. 92(1), pages 160-180, March.
  13. Paul Beaudry & Fabrice Collard, 2002. "Why has the Employment-Productivity Tradeoff among Industrialized Countries been so strong?," NBER Working Papers 8754, National Bureau of Economic Research, Inc.
  14. Milgrom, Paul & Roberts, John, 1994. "Comparing Equilibria," American Economic Review, American Economic Association, vol. 84(3), pages 441-59, June.
  15. Joseph Zeira, 1998. "Workers, Machines, And Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1091-1117, November.
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  17. Segerstrom, Paul S & Anant, T C A & Dinopoulos, Elias, 1990. "A Schumpeterian Model of the Product Life Cycle," American Economic Review, American Economic Association, vol. 80(5), pages 1077-91, December.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Factor-Biased Technological Change
    by rlanglois in Organizations and Markets on 2009-06-15 16:39:49
  2. Cheap Labor and the Great Stagnation
    by Peter Frase in peter frase on 2011-07-27 19:51:52
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Cited by:
  1. Tausch, Arno & Heshmati, Almas, 2011. "Migration, Openness and the Global Preconditions of 'Smart Development'," IZA Discussion Papers 6169, Institute for the Study of Labor (IZA).
  2. Crafts, Nicholas, 2010. "The Contribution of New Technology to Economic Growth: Lessons from Economic History," CAGE Online Working Paper Series 01, Competitive Advantage in the Global Economy (CAGE).
  3. James Fenske, 2012. ""Rubber will not keep in this country": Failed Development in Benin, 1897-1921," Economics Series Working Papers Number 108, University of Oxford, Department of Economics.
  4. Broadberry,Stephen; Ghosal, Sayantan; Proto, Eugenio, 2011. "Is Anonymity the Missing Link Between Commercial and Industrial Revolution?," CAGE Online Working Paper Series 53, Competitive Advantage in the Global Economy (CAGE).
  5. Nicholas Crafts, 2010. "Cliometrics and technological change: a survey," European Journal of the History of Economic Thought, Taylor and Francis Journals, vol. 17(5), pages 1127-1147.
  6. repec:pra:mprapa:43050 is not listed on IDEAS

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