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More Machines or Better Machines?

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Author Info
James Bessen () (Research on Innovation, Boston University School of Law)

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Abstract

Using an engineering production function and detailed information on major inventions in nineteenth century cotton weaving, this paper explores how much of the rapid growth in labor productivity arose from capital-labor substitution and how much from technical change. I find that labor-saving technical change accounts for almost all of the growth. However, much of the labor-saving bias arose not from inventions, but from acquisition of new knowledge and skills by weavers. Moreover, this was endogenous, influenced by wages and prices. This provides a technology-based explanation for the persistent association between economic growth and capital deepening.

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Paper provided by Research on Innovation in its series Working Papers with number 0803.

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Date of creation: 2008
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Handle: RePEc:roi:wpaper:0803

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Web page: http://www.researchoninnovation.org

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  7. Binswanger, Hans P, 1974. "The Measurement of Technical Change Biases with Many Factors of Production," American Economic Review, American Economic Association, vol. 64(6), pages 964-76, December. [Downloadable!] (restricted)
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  29. Blackorby, Charles & Lovell, C A Knox & Thursby, Marie C, 1976. "Extended Hicks Neutral Technical Change," Economic Journal, Royal Economic Society, vol. 86(344), pages 845-52, December. [Downloadable!] (restricted)
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  1. James Bessen, 2008. "Accounting for Productivity Growth When Technical Change is Biased," Working Papers 0802, Research on Innovation. [Downloadable!]
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