When Does Labor Scarcity Encourage Innovation?

Daron Acemoglu

Journal of Political Economy, 2010, vol. 118, issue 6, 1037 - 1078

Abstract: This paper studies whether labor scarcity encourages technological advances, that is, technology adoption or innovation, for example, as claimed by Habakkuk in the context of nineteenth-century United States. I define technology as strongly labor saving if technological advances reduce the marginal product of labor and as strongly labor complementary if they increase it. I show that labor scarcity encourages technological advances if technology is strongly labor saving and will discourage them if technology is strongly labor complementary. I also show that technology can be strongly labor saving in plausible environments but not in many canonical macroeconomic models.

Date: 2010
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Citations: View citations in EconPapers (211)

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Working Paper: When Does Labor Scarcity Encourage Innovation? (2009)
Working Paper: When Does Labor Scarcity Encourage Innovation? (2009)
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