EconPapers    
Economics at your fingertips  
 

The effects of factor and sector biased technical change revisited

Robert Stehrer

No 6, FIW Working Paper series from FIW

Abstract: In the trade-technology-wage debate, the effects of the various forms of technical progress on relative factor prices have been addressed in a number of contributions over the past decade. However, the existing literature is far from conclusive. The various contributions have either relied on specific assumptions, such as Leontief technologies or Cobb-Douglas demand, that have been decisive for the respective conclusions, or they used a more general framework, arriving at ambiguous results in many cases. In this paper we analyse a general equilibrium framework with CES production and CES demand functions, which allows for any discrete number of sectors and countries integrated via trade flows. Technologies are country- and sector-specific and endowment structures differ across countries. The necessary and sufficient conditions under which the relative wage rates are rising or falling in the domestic and foreign economies are derived. This is done for various types of factor- and sector-biased technical change taking place in a particular sector in either the home or foreign country. The conditions - depending on the relative skill intensity of the innovating sector, the elasticities of substitution in demand and supply, the relative factor endowment and the prevailing (equilibrium) relative wage rate - allow for straightforward economic interpretations. This permits to solve the cases classified as ambiguous in the existing literature and provides clear-cut conditions which are important for modelling and empirical research. Furthermore, the results are interpreted with respect to recent empirical studies where special emphasis is given to the sector-biased versus factor-biased hypothesis.

Keywords: Trade; technology; wage debate; wage; CES production; CES demand; CES; trade flows; general equilibrium; skill intensity; skill; factor endowment (search for similar items in EconPapers)
JEL-codes: C62 C68 F16 O33 (search for similar items in EconPapers)
Pages: 29
Date: 2007-06
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.fiw.ac.at/fileadmin/Documents/Publikati ... er/N_006-stehrer.pdf full text (application/pdf)
none

Related works:
Journal Article: The effects of factor and sector biased technical change revisited (2010) Downloads
Working Paper: The Effects of Factor- and Sector-biased Technical Change Revisited (2005) Downloads
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:wsr:wpaper:y:2007:i:006

Ordering information: This working paper can be ordered from
FIW Project Office Austrian Institute of Economic Research Arsenal Objekt 20 A-1030 Vienna

Access Statistics for this paper

More papers in FIW Working Paper series from FIW
Bibliographic data for series maintained by ().

 
Page updated 2025-04-24
Handle: RePEc:wsr:wpaper:y:2007:i:006