On the positive relation between the wage share and labor productivity growth with endogenous size and direction of technical change

Luca Zamparelli

Economic Modelling, 2024, vol. 131, issue C

Abstract: This paper combines induced innovation and endogenous growth to investigate two issues: the relation between the wage share and labor productivity growth and the potential influence of the saving rate on the steady state wage share. We assume that myopic competitive firms choose the size and direction of technical change to maximize the growth rate of profits. First, we find technological conditions sufficient to ensure that labor productivity growth is a positive function of the wage share. Second, we show that the steady state wage share depends on the saving rate if, and only if, R&D investment affects the marginal rate of transformation between labor and capital productivity growth. Both results have important policy implications as they clarify under what conditions any factor affecting the wage share or the saving rate will have an impact on labor productivity growth or steady-state income distribution.

Keywords: Factor income shares; Induced innovation; R&D; Growth models (search for similar items in EconPapers)
JEL-codes: D24 D33 E25 O30 O41 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999323004340
Full text for ScienceDirect subscribers only

Related works:
Working Paper: On the Positive Relation between the Wage Share and Labor Productivity Growth with Endogenous Size and Direction of Technical Change (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:131:y:2024:i:c:s0264999323004340

DOI: 10.1016/j.econmod.2023.106622

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().