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Academic Journal of Business & Management, 2021, 3(2); doi: 10.25236/AJBM.2021.030214.

The Effects of Biased Technical Progress with Endogenous Growth on Factor Shares


Liu Yueping1, Ju Xiaoxing2,*, Zhang Min3

Corresponding Author:
Ju Xiaoxing

1Guangzhou Rural Credit Union,Guangzhou 510320;

2Chongqing Xingnong Financing Guarantee Group Corporation,Chongqing 400000

3School of Business and Law, Foshan University, Foshan 528000

*Corresponding Author


Based on the CES model by Arrow et al., this paper incorporates the hypothesis of induced innovation, takes household and firm behavior as subjects, and analyzes the effects of biased technical progress on factor shares with endogenous growth. The results show that, if substitution elasticity s more than 1, the factor-augmenting model generates endogenous growth; if saving rate is constant, and technical progress s Harrod neutral, there is a saddle path, capital share remains constant and technical progress is biased to capital; if savings rate is not a constant, nor technical progress Harrod neutral, then there is still a saddle path, but equilibrium point is half equilibrium point, and the bias turns towards labor. It is also found that when innovation possibility frontier is symmetric, capital share is less than 1/2, and long run factor shares are consistent with the theory.


Factor-Augmenting Model, Endogenous Growth, Technical Progress Bias, Factor Shares

Cite This Paper

Liu Yueping, Ju Xiaoxing, Zhang Min. The Effects of Biased Technical Progress with Endogenous Growth on Factor Shares. Academic Journal of Business & Management (2021) Vol. 3, Issue 2: 74-85. https://doi.org/10.25236/AJBM.2021.030214.


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