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Factor-Augmenting Technical Change: an Empirical Assessment

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  • Carlo Carraro

    (Department of Economics, University Of Venice C� Foscari)

  • Enrica De Cian

    (University of Venice, Fondazione Enrico Mattei)

Abstract

This paper estimates factor-specific technical change and input substitution using a structural approach. It improves upon the existing literature by introducing technology drivers for factor productivities and by assessing the impact of endogenous technical change on the estimates of substitution elasticities. The empirical results suggest that factor-productivities are indeed endogenous. In addition, technology drivers are factor-specific. Whereas R&D investments and machinery imports are important determinants of energy and capital productivity, education is found to be statistically related to labour productivity. The rate of energy-augmenting technical change is larger than that of either labour or capital. By contrast, the productivity of these two factors grows at similar rates. Estimates of the elasticities of substitution are within the ranges identified by previous literature. In addition, our results suggest that endogenous technical change lowers the estimated values of the substitution elasticity.

Suggested Citation

  • Carlo Carraro & Enrica De Cian, 2009. "Factor-Augmenting Technical Change: an Empirical Assessment," Working Papers 2009_29, Department of Economics, University of Venice "Ca' Foscari".
    • Handle: RePEc:ven:wpaper:2009_29
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    Citations

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    Cited by:

    1. Carlo Carraro & Enrica De Cian & Lea Nicita, 2009. "Modeling Biased Technical Change. Implications For Climate Policy," Working Papers 2009_27, Department of Economics, University of Venice "Ca' Foscari".
    2. Go, Delfin S. & Lofgren, Hans & Ramos, Fabian Mendez & Robinson, Sherman, 2016. "Estimating parameters and structural change in CGE models using a Bayesian cross-entropy estimation approach," Economic Modelling, Elsevier, vol. 52(PB), pages 790-811.
    3. Baccianti, Claudio, 2013. "Estimation of sectoral elasticities of substitution along the international technology frontier," ZEW Discussion Papers 13-092, ZEW - Leibniz Centre for European Economic Research.
    4. De Cian, Enrica, 2009. "Factor-Augmenting Technical Change: An Empirical Assessment," Sustainable Development Papers 50403, Fondazione Eni Enrico Mattei (FEEM).
    5. Carlo Carraro & Enrica De Cian & Massimo Tavoni, 2012. "Human Capital, Innovation, and Climate Policy: An Integrated Assessment," Working Papers 2012.18, Fondazione Eni Enrico Mattei.
    6. Khafagy, Amr & Vigani, Mauro, 2022. "Technical change and the Common Agricultural Policy," Food Policy, Elsevier, vol. 109(C).
    7. Michael Hübler & Alexander Glas, 2014. "The Energy-Bias of North–South Technology Spillovers: A Global, Bilateral, Bisectoral Trade Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(1), pages 59-89, May.
    8. Gnidchenko, Andrey, 2011. "Моделирование Технологических И Институциональных Эффектов В Макроэкономическом Прогнозировании [Technological and Institutional Effects Modeling in Macroeconomic Forecasting]," MPRA Paper 35484, University Library of Munich, Germany, revised May 2011.
    9. Carlo Carraro & Enrica De Cian & Massimo Tavoni, 2009. "Human Capital Formation and Global Warming Mitigation: Evidence from an Integrated Assessment Model," CESifo Working Paper Series 2874, CESifo.
    10. Enrica De Cian & Ramiro Parrado, 2012. "Technology Spillovers Embodied in International Trade: Intertemporal, regional and sectoral effects in a global CGE," Working Papers 2012.27, Fondazione Eni Enrico Mattei.
    11. Carraro, Carlo & De Cian, Enrica & Nicita, Lea & Massetti, Emanuele & Verdolini, Elena, 2010. "Environmental Policy and Technical Change: A Survey," International Review of Environmental and Resource Economics, now publishers, vol. 4(2), pages 163-219, October.

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    More about this item

    Keywords

    Technical change; Technology spillovers; Endogenous growth; Panel regression;
    All these keywords.

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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