EconPapers    
Economics at your fingertips  
 

Evidence of induced innovation in US sectoral Capital´s shares

Andrew Young (), Hernando Zuleta () and Andres Garcia-Suaza ()

Documentos de Trabajo from Universidad del Rosario

Abstract: We use annual data on capital´s share and relative factor prices from 35 US industriesfrom 1960 to 2005 to test the induced innovation hypothesis. We derive, from a productionfunction framework, testable implications for the effect of contemporaneous and lagged factorprice ratios on capital´s share of production. The predicted effect is positive or negativedepending on the elasticity of substitution between labor and capital. From panel regressions, theestimated effect of the contemporaneous factor price ratio implies an elasticity of substitutionthat is less than unity, consistent with the consensus from the literature. Based on this, ournegative estimated effects for lagged price ratios are both statistically significant and consistentwith the induced innovation hypothesis.

Keywords: induced innovation; biased technical change; capital´s share; labor´s share; elasticityof substitution (search for similar items in EconPapers)
JEL-codes: O31 O47 E25 E23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-ino
Date: 2010-03-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
http://repository.urosario.edu.co/bitstream/handle/10336/10974/6740.pdf

Related works:
Working Paper: Evidence of Induced Innovation in US Sectoral Capital’s Shares (2010) 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:col:000092:006740

Access Statistics for this paper

More papers in Documentos de Trabajo from Universidad del Rosario
Bibliographic data for series maintained by Facultad de Economía ().

 
Page updated 2019-10-23
Handle: RePEc:col:000092:006740