Comments on: Factor-Biased Technological Change

By: Joseph Mahoney

Joseph Mahoney — Tue, 16 Jun 2009 09:31:40 +0000

Informative posting and insightful comments: much appreciated.

By: REW

REW — Tue, 16 Jun 2009 01:02:27 +0000

I’d like to point out some work on induced technical change that has been around for a quarter-century, based on microeconomic models of factor markets. Just a short while before his death in 2008 at the age of 84, Vernon Ruttan produced “Induced Technical Change, Induced Institutional Change and Mechanism Design”, which places his work in the field (along with Acemoglu’s), beginning with his landmark work with Hayami. See http://www.apec.umn.edu/documents/RuttanT&DSemSp08.pdf

By: spostrel

spostrel — Tue, 16 Jun 2009 00:08:39 +0000

The problem with all such theories is that they assume that the technological possibilites are limited to the specific type under study. It seems more likely that factor prices and regulations affect the direction of technical progress more than they do the level. Another way of putting this is that a main opportunity cost of a particular form of technological development is the foregone trajectories in other directions. For example, when all the chemists at a plastics plant are absorbed in meeting environmental regulations, new product development is likely to be slower.

By: Henrik Berglund

Henrik Berglund — Mon, 15 Jun 2009 20:17:44 +0000

Just reading the abstract made me think of the solidaristic wage policies developed by Swedish trade unionists and social democrats Gösta Rehn and Rudolf Meidner in the late 1940s. Their goal was to combine full employment with equality in pay, while keeping inflation at bay and, importantly, ensuring that national economy as a whole remained competitive.

Without going into too much detail, equality in pay was critical to ensuring national competitiveness. The solidaristic wage policy – which based wage increases on average productivity growth-figures – would force inefficient labor intensive industries to rationalize or die. Combined with an active labor market policy, this quickly moved labor into more efficient industries (arguably even faster than the free market could), thus increasing the overall productivity of the economy.

Of course, there was also the fear that successful firms would make extraordinarily large profits, which in turn led to the much despised Wage Earner Funds…

By: Ma question bête (?!) du soir « Rationalité Limitée

Ma question bête (?!) du soir « Rationalité Limitée — Mon, 15 Jun 2009 19:46:16 +0000

[...] question bête (?!) du soir Via Organizations and Markets, voici l’abstract d’un récent article de l’économiste futur nobélisable Daron [...]