A Generalized Steady-State Growth Theorem

Is there an economic justification for why technical change is by assumption
<br />labor-augmenting in Dynamic Macroeconomics? The literature on the
<br />endogenous choice of capital- and labor-augmenting technical change finds that
<br />technical change is purely labor-augmenting in steady state. The present paper
<br />shows that this finding is mainly an artefact of the underlying mathematical models.
<br />To make this point Uzawa’s steady-state growth theorem (Uzawa (1961)) is
<br />generalized to a neoclassical economy that, besides consumption and capital accumulation,
<br />uses current output to create technical progress or to manufacture
<br />intermediates. The generalized steady-state growth theorem is shown to encompass
<br />four models of endogenous capital- and labor-augmenting technical change,
<br />namely, Irmen and Tabakovic (2015), Acemoglu (2003), Acemoglu (2009), Chapter
<br />15, and the typical model of the induced innovations literature of the 1960s.