Labor supply, biased technological change and economic growth

Hernando Zuleta and Antiago Alberico ()

Revista ESPE - Ensayos Sobre Política Económica, 2007, vol. 25, issue 53, No 4636, 260-286

Abstract: We consider a model of factor saving innovations and study the effects of exogenous changes in labor supply. In a biased innovations setting, as economies accumulate capital, labor becomes relatively scarce and expensive. As a consequence, incentives for la-bor saving and capital using innovations appear. By the same token, exogenous changes in labor supply affect factor prices. In general, a reduction in la-bor supply decreases current output and generates incentives for labor saving innovations. Therefore, the effect that a change in the supply of labor has on factor prices is mitigated and, depending on the initial conditions, it may be contrasted by the effect of the technological bias. Finally, the movements of the factor prices affect the saving decisions and consequently the dynamics of economic growth. We explore the consequences of an exogenous de-crease in labor supply in two different settings: a homogenous agents model with infi nite horizon and an overlapping generations model

Keywords: Labor supply; factor income shares; economic growth. (search for similar items in EconPapers)
JEL-codes: J20 J31 O11 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (2)

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https://doi.org/10.32468/Espe.5306

Related works:
Journal Article: Labor supply, biased technological change and economic growth (2007)
Working Paper: Labor supply, biased technological change and economic growth (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:col:000107:004636

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