ENDOGENOUS TASK-BASED TECHNICAL CHANGE—FACTOR SCARCITY AND FACTOR PRICES
ENDOGENOUS TASK-BASED TECHNICAL CHANGE—FACTOR SCARCITY AND FACTOR PRICES

Summary/Abstract: This paper develops a static model of endogenous task-based technical progressto study how factor scarcity induces technological progress and changes in factorprices. The equilibrium technology is multi-dimensional and not strongly factorsavingin the sense of Acemoglu (2010). Nevertheless, labour scarcity induces labourproductivity growth. There is a weak but no strong absolute equilibrium bias. Thismodel provides a plausible interpretation of the famous contention of Hicks (1932)about the role of factor prices and factor endowments for induced innovations. It mayserve as a microfoundation for canonical macro-economic models. Moreover, it accommodatesfeatures like endogenous factor supplies and a binding minimum wage.

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