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

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  • Hernando Zuleta
  • Daniel Gamboa

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.

Suggested Citation

  • Hernando Zuleta & Daniel Gamboa, 2019. "Factor reallocation and growth: what if there are labor saving innovations?," Documentos CEDE 17199, Universidad de los Andes, Facultad de Economía, CEDE.
    • Handle: RePEc:col:000089:017199
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    1. Carlos Esteban Posada, 2020. "Cambio técnico y política económica: la teoría y el caso colombiano (1950-2019)," Documentos de Trabajo de Valor Público 18506, Universidad EAFIT.

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    More about this item

    Keywords

    Factor reallocation; Capital using and labor saving innovations; factor income shares; structural change.;
    All these keywords.

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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