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Directed Technological Change: A Knowledge-Based Model

Author

Listed:
  • Li, Tailong
  • Pan, Shiyuan
  • Zou, Heng-fu

Abstract

In a knowledge-based growth model where skilled workers are used in innovation and production, skill-biased technological change may lower average R&D productivity via an innovation possibilities frontier effect that eliminates scale effects. We show that skill-biased technological change increases the skill premium even if the elasticity of substitution between skilled and unskilled workers is less than two. Trade between developed countries promotes skill-biased technological change, thus raising wage inequality. Trade between developed and developing countries has differing effects: it induces relatively skill-replacing technological change and lowers wage inequality in the developed country but has the opposite effects in the developing country. Finally, we show that trade can stimulate or hurt economic growth.

Suggested Citation

  • Li, Tailong & Pan, Shiyuan & Zou, Heng-fu, 2015. "Directed Technological Change: A Knowledge-Based Model," Macroeconomic Dynamics, Cambridge University Press, vol. 19(1), pages 116-143, January.
    • Handle: RePEc:cup:macdyn:v:19:y:2015:i:01:p:116-143_00
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    Cited by:

    1. Xiaohui Yang & Zhen Jia & Zhongmin Yang, 2024. "Does biased technological progress facilitate the reduction of transportation carbon emissions? A threshold-based perspective," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(2), pages 4269-4292, February.
    2. Sandels, C. & Brodén, D. & Widén, J. & Nordström, L. & Andersson, E., 2016. "Modeling office building consumer load with a combined physical and behavioral approach: Simulation and validation," Applied Energy, Elsevier, vol. 162(C), pages 472-485.
    3. Cansino, José M. & Román, Rocío, 2017. "Energy efficiency improvements in air traffic: The case of Airbus A320 in Spain," Energy Policy, Elsevier, vol. 101(C), pages 109-122.
    4. Óscar Afonso & Ana Maria Bandeira & Manuela Magalhães, 2017. "Effect of the Tax System ON R&D Intensity, Growth, Wages and Consumption Share," Australian Economic Papers, Wiley Blackwell, vol. 56(4), pages 271-291, December.
    5. Afonso, Oscar & Gil, Pedro Mazeda, 2024. "Territorial comparative advantage, wage inequality, and monetary policy in the global world," Journal of International Money and Finance, Elsevier, vol. 143(C).
    6. Óscar Afonso, 2022. "Growth and wage effects of the monetary policy," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 4058-4084, October.
    7. Chen, Xi, 2017. "Biased Technical Change, Scale, And Factor Substitution In U.S. Manufacturing Industries," Macroeconomic Dynamics, Cambridge University Press, vol. 21(2), pages 488-514, March.
    8. Batas Bjelić, Ilija & Rajaković, Nikola & Ćosić, Boris & Duić, Neven, 2013. "Increasing wind power penetration into the existing Serbian energy system," Energy, Elsevier, vol. 57(C), pages 30-37.

    More about this item

    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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