Technical Change; Factor Prices; Factor-Specific Tasks; Neoclassical Production
Abstract :
[en] This paper introduces tasks into the neoclassical production sector. Competitive
firms choose the profit-maximizing amounts of factor-specific tasks that determine
their factor demands and output supplies. We show that the effect of factor-augmenting
technical change on relative and absolute factor prices can be decomposed into a productivity
effect and a market size effect of opposite sign. These effects appear since
the novel task-based approach distinguishes between the demands for tasks and the
demands for factors. This perspective provides a new intuition for the emergence of
relative and absolute factor biases and the role of the elasticity of substitution.
Disciplines :
Macroeconomics & monetary economics
Author, co-author :
IRMEN, Andreas ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA)
Language :
English
Title :
TASKS, TECHNOLOGY, AND FACTOR PRICES IN THE NEOCLASSICAL PRODUCTION SECTOR
