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PRINZ Seminar

Disentangling the directions of technical change: a new growth accounting method

Emilien Ravigne (University of Oxford)


Thursday 18 May 2023 11:30 - 12:30

This event is both online and in person

SAL 2.04, 2nd Floor Conference Room, Sir Arthur Lewis Building, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH

About this event

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. We present a growth accounting framework that disentangles the different factor-saving directions of technical change and factor substitution. We build the framework for two primary factors, capital and labour. We represent technical change 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. We apply this framework 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? We find that most industries are capital-biased but with a growing trend of labour-saving technical change. In some industries, we find significant evidence 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.


Participants are expected to adhere to the Events Code of Conduct.


This event will take place in SAL 2.04, 2nd Floor Conference Room, Sir Arthur Lewis Building, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH.

The building is labelled SAL on the map. Enter the building via Lincoln's Inn Fields.

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