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Factor saving innovations and factor income shares

  • Hernando Zuleta

    ()

We present an endogenous growth model where innovation are factor saving. Tecnologies can be changed paying a cost so, tecnological change take place only if the benefits are larger than the cost. Since the gains derived from factor saving innovations depend on factor abundance, biased innovations respond to changes in factor supply, that is, as economy becomes more capital abundant agents try to use in a more intensively. Therefore (a) the elasticity of the output with respect to reproducible factors depends on the capital abundance of the economy and (b) the income share of reducible factors increase as the economy growths. Another insight of the model is that in some economies the production function converges to an AK in the long run, while in others long run growths is cero.

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File URL: http://repository.urosario.edu.co/bitstream/handle/10336/11010/2706.pdf
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Paper provided by UNIVERSIDAD DEL ROSARIO in its series DOCUMENTOS DE TRABAJO with number 002706.

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Length: 41
Date of creation: 01 Sep 2006
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Handle: RePEc:col:000092:002706
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  1. Alan Krueger, 1999. "Measuring Labor's Share," NBER Working Papers 7006, National Bureau of Economic Research, Inc.
  2. Per Krusell & Lee E. Ohanian & JosÈ-Victor RÌos-Rull & Giovanni L. Violante, 2000. "Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis," Econometrica, Econometric Society, vol. 68(5), pages 1029-1054, September.
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  14. 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.
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  17. Zeira, Joseph, 1995. "Workers, Machines and Economic Growth," CEPR Discussion Papers 1139, C.E.P.R. Discussion Papers.
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  19. Boldrin, Michele & Levine, David, 2002. "Perfectly Competitive Innovation," CEPR Discussion Papers 3274, C.E.P.R. Discussion Papers.
  20. Michele Boldrin & David K Levine, 2001. "Factor Saving Innovation," Levine's Working Paper Archive 625018000000000088, David K. Levine.
  21. Joseph Zeira, 2006. "Machines as Engines of Growth," DEGIT Conference Papers c011_059, DEGIT, Dynamics, Economic Growth, and International Trade.
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  23. Changyong Rhee, 1991. "Dynamic Inefficiency in an Economy with Land," Review of Economic Studies, Oxford University Press, vol. 58(4), pages 791-797.
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