Reference : Tasks, Technology, and Factor Prices in the Neoclassical Production Sector
E-prints/Working papers : Already available on another site
Business & economic sciences : Macroeconomics & monetary economics
Tasks, Technology, and Factor Prices in the Neoclassical Production Sector
Irmen, Andreas mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM) >]
CESifo Working Paper No. 8353, June 2020
[en] technical change ; factor prices ; factor-specific tasks ; neoclassical production
[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 task-demand 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.

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