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Tasks, Technology, and Factor Prices in the Neoclassical Production Sector

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  • Andreas Irmen

    (CREA, Université du Luxembourg)

Abstract

This paper introduces tasks into the neoclassical production sector. Competitive firms choose the profit-maximizing amounts of factor-specific tasks that determine their factor demands and output supplies. We show that the effect of factor-augmenting technical change on relative and absolute factor prices can be decomposed into a productivity effect and a market size effect of opposite sign. These effects appear since the novel task-based approach distinguishes between the demands for tasks and the demands for factors. This perspective provides a new intuition for the emergence of relative and absolute factor biases and the role of the elasticity of substitution.

Suggested Citation

  • Andreas Irmen, 2018. "Tasks, Technology, and Factor Prices in the Neoclassical Production Sector," DEM Discussion Paper Series 18-22, Department of Economics at the University of Luxembourg.
  • Handle: RePEc:luc:wpaper:18-22
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    References listed on IDEAS

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    Cited by:

    1. Andreas Irmen, 2020. "Tasks, technology, and factor prices in the neoclassical production sector," Journal of Economics, Springer, vol. 131(2), pages 101-121, October.

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    More about this item

    Keywords

    Technical Change; Factor Prices; Factor-Specific Tasks; Neoclassical Production.;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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