Current growth theories do not allow for the study of the bias of technical change and the evolution of factor shares —- at aggregate nor sectoral level — without strong assumptions on the elasticity of substitution between capital and labour.
Emilien Ravigné will present a growth accounting framework that disentangles the different factor-saving directions of technical change and factor substitution. The framework is built for two primary factors, capital and labour. Technical change is represented as the shift of a Leontief production function to a new function which is the convex hull of two shifts of this Leontief production function: one purely labour-saving, the other purely capital-saving. The framework is applied to industry-level data to answer the following questions: What has been the bias of technical change? Does an increase in the price of one factor spurs specific factor-saving innovation? Can we forecast the evolution of factor shares? Most industries are found to be capital-biased but with a growing trend of labour-saving technical change. In some industries, significant evidence is found of labour-saving technical change induced by the cost of labour. The framework is validated by better forecasting the evolution of the factors shares than CES, Cobb-Douglas and Leontief functions.
This event is organised by the Institute for New Economic Thinking at the Oxford Martin School.
Register here for in-person or virtual attendance: https://us02web.zoom.us/meetin...
Dr Emilien Ravigné
Postdoctoral Researcher, INET Oxford
Emilien Ravigné is a postdoctoral researcher the Institute for New Economic Thinking (INET) at the Oxford Martin School and the Smith School for the Enterprise and the Environment. He is interested in the impacts of climate policies on inequalities.
He has assessed the distributional impacts of the French net zero policies package on households and studied the direction of technical change and how it affects the distribution of income.
At INET he is part of the PRINZ project, a ESRC funded muti-university collaboration, to examine how the transition to a clean economy affects the labour markets. Emilien will assess the impacts of net zero policies on productivity in the UK at the national, regional and firm levels.
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