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Factor reallocation and growth: what if there are labor saving innovations?

Hernando Zuleta () and Daniel Gamboa ()

Documentos CEDE from Universidad de los Andes - CEDE

Abstract: We claim that the standard methodology to study the effects of the reallocation of factors on growth is not adequate in the presence of biased innovations. Labor-saving innovations increase output per worker and may decrease the marginal productivity of labor. Therefore, a reallocation of labor from a sector with higher output per worker to a sector with lower output per worker may be productivity enhancing.

Keywords: Factor reallocation; Capital using and labor saving innovations; factor income shares; structural change. (search for similar items in EconPapers)
JEL-codes: D33 O11 O31 O33 J30 (search for similar items in EconPapers)
Date: 2019-02-26
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Handle: RePEc:col:000089:017199