Endogenous capital-augmenting R&D, intersectoral labor reallocation, and the movement of the labor share

Pengfei Zhang ()
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Pengfei Zhang: Peking University

Journal of Economics, 2023, vol. 140, issue 1, No 1, 36 pages

Abstract: Abstract I construct a hybrid model of endogenous and semi-endogenous growth to analyze the impact of labor reallocation between capital-augmenting R&D and final-goods production. By affecting the price of capital-intensive goods, factor-augmenting technical change or capital deepening will induce intersectoral labor reallocation between capital-augmenting R&D and final-goods production. The intersectoral labor reallocation in this paper can reverse some seemingly fundamental implications of the neoclassical growth models. In particular, given the gross complementarity of capital and labor, intersectoral labor reallocation implies that capital-augmenting technical change or capital deepening decreases the labor share, while labor-augmenting technical change increases the labor share. In the present model, a strengthening of the capital-augmenting R&D spillover effect helps to increase the importance of investment-specific technology and reduce the relative price of investment goods.

Keywords: Balanced growth; Biased technology; Labor share; RD spillover (search for similar items in EconPapers)
JEL-codes: E23 O30 O40 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:140:y:2023:i:1:d:10.1007_s00712-023-00828-9

DOI: 10.1007/s00712-023-00828-9

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