This paper combines induced innovation and endogenous growth to investigate two issues: the relation between the wage share and labor productivity growth and the potential influence of the saving rate on the steady state wage share. We assume that myopic competitive firms choose the size and direction of technical change to maximize the growth rate of profits. First, we find technological conditions sufficient to ensure that labor productivity growth is a positive function of the wage share. Second, we show that the steady state wage share depends on the saving rate if, and only if, R&D investment affects the marginal rate of transformation between labor and capital productivity growth. Both results have important policy implications as they clarify under what conditions any factor affecting the wage share or the saving rate will have an impact on labor productivity growth or steady-state income distribution.

On the positive relation between the wage share and labor productivity growth with endogenous size and direction of technical change / Zamparelli, L.. - In: ECONOMIC MODELLING. - ISSN 0264-9993. - 131:(2024). [10.1016/j.econmod.2023.106622]

On the positive relation between the wage share and labor productivity growth with endogenous size and direction of technical change

Zamparelli L.
2024

Abstract

This paper combines induced innovation and endogenous growth to investigate two issues: the relation between the wage share and labor productivity growth and the potential influence of the saving rate on the steady state wage share. We assume that myopic competitive firms choose the size and direction of technical change to maximize the growth rate of profits. First, we find technological conditions sufficient to ensure that labor productivity growth is a positive function of the wage share. Second, we show that the steady state wage share depends on the saving rate if, and only if, R&D investment affects the marginal rate of transformation between labor and capital productivity growth. Both results have important policy implications as they clarify under what conditions any factor affecting the wage share or the saving rate will have an impact on labor productivity growth or steady-state income distribution.
2024
Factor income shares; Induced innovation; R&D; Growth models
01 Pubblicazione su rivista::01a Articolo in rivista
On the positive relation between the wage share and labor productivity growth with endogenous size and direction of technical change / Zamparelli, L.. - In: ECONOMIC MODELLING. - ISSN 0264-9993. - 131:(2024). [10.1016/j.econmod.2023.106622]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11573/1701932
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