Labor- and Capital-Augmenting Technical Change

46 Pages Posted: 22 Jan 2003

See all articles by Daron Acemoglu

Daron Acemoglu

Massachusetts Institute of Technology (MIT) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

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Date Written: December 2002

Abstract

I analyze an economy in which firms can undertake both labor- and capital-augmenting technological improvements. In the long run, the economy resembles the standard growth model with purely labor-augmenting technical change, and the share of labor in GDP is constant. Along the transition path, however, there is capital-augmenting technical change and factor shares change. Tax policy and changes in labor supply or savings typically change factor shares in the short run, but have no or little effect on the long-run factor distribution of income.

Keywords: Economic Growth, Endogenous Growth, Factor Shares, Technical Change

JEL Classification: O33, O14, O31, E25

Suggested Citation

Acemoglu, Daron, Labor- and Capital-Augmenting Technical Change (December 2002). Available at SSRN: https://ssrn.com/abstract=372820 or http://dx.doi.org/10.2139/ssrn.372820

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