14.452 Economic Growth: Directed Technological Change

14.452 Economic Growth: Lecture 12, Directed

Technological Change

Daron Acemoglu

MIT

December 8, 2009.

Daron Acemoglu (MIT)

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Directed Technological Change Introduction

Introduction

Thus far have focused on a single type of technological change (e.g., Hicks-neutral). But, technological change is often not neutral:

1 Benefits some factors of production and some agents more than others.

Distributional effects imply some groups will embrace new technologies

and others oppose them.

2 Limiting to only one type of technological change obscures the competing effects that determine the nature of technological change.

Directed technological change: endogenize the direction and bias of new technologies that are developed and adopted.

Daron Acemoglu (MIT)

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Biased Technological Change Importance

Skill-biased technological change

Over the past 60 years, the U.S. relative supply of skills has increased, but:

1 there has also been an increase in the college premium, and 2 this increase accelerated in the late 1960s, and the skill premium

increased very rapidly beginning in the late 1970s. Standard explanation: skill bias technical change, and an acceleration that coincided with the changes in the relative supply of skills. Important question: skill bias is endogenous, so, why has technological change become more skill biased in recent decades?

Daron Acemoglu (MIT)

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College wage premium Rel. sup ply of college skills

Biased Technological Change Importance

Skill-biased technological change

College wage premium .6

Rel. supply of college skills .8

.6 .5

.4

.4 .2

.3

0

39

49

59

69

79

89 96

year

Courtesy of Princeton University Press. Used with permission. Figure 15.1 in Acemoglu, Daron. Introduction to Modern Economic Growth.

Princeton, NJ: Princeton University Press, 2009. ISBN: 9780691132921.

Figure: R elative S upply of C ollege S kills and C ollege Prem ium

Daron Acemoglu (MIT)

Economic Growth Lecture 12

December 8, 2009.

4 / 71

Biased Technological Change Importance

Unskill-biased technological change

Late 18th and early 19th unskill-bias:

"First in firearms, then in clocks, pumps, locks, mechanical reapers,

typewriters, sewing machines, and eventually in engines and bicycles,

interchangeable parts technology proved superior and replaced the

skilled artisans working with chisel and file." (Mokyr 1990, p. 137)

Why was technological change unskilled-biased then and

skilled-biased now?

Daron Acemoglu (MIT)

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December 8, 2009. 5 / 71

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