Li, Defu and Benjamin, Bental (2021): Factor Supply Elasticities, Returns to Scale, and the Direction of Technological Progress.

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Abstract
This paper finds that the steadystate direction of technological progress is determined by the relative size of factor supply elasticities and the returns to scale of the production function, which have so far been ignored. However, the relative price (Hicks, 1932) and relative market size (Acemoglu, 2002) emphasized in the existing literature have only shortterm effects. This conclusion is obtained by introducing generalized factor accumulation processes that do not restrict factor supply elasticities, and a generalized production function that does not restrict the returns to scale. It emanates solely from the characterizations of production function, steadystate growth, direction of technological progress and factor supply elasticities. The paper also analyzes a particular microfounded growth model and uses it to exemplify the conclusions. The findings of this paper provide new explanations to the Uzawa (1961) steadystate theorem puzzle as well as to the Kaldor facts characterization of modern economic growth. It also suggests a way to reconcile falling investment good prices with the Kaldor facts. In addition, it may help explain why technological progress did not increase per capita income before the industrial revolution and what might have led to the modern pattern of economic growth.
Item Type:  MPRA Paper 

Original Title:  Factor Supply Elasticities, Returns to Scale, and the Direction of Technological Progress 
Language:  English 
Keywords:  Economic Growth, Direction of Technological Progress, Returns to Scale, Factor Supply Elasticities, Uzawa’s SteadyState Theorem, Industrial Revolution, Adjustment Cost 
Subjects:  E  Macroeconomics and Monetary Economics > E1  General Aggregative Models > E13  Neoclassical E  Macroeconomics and Monetary Economics > E2  Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E25  Aggregate Factor Income Distribution O  Economic Development, Innovation, Technological Change, and Growth > O3  Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33  Technological Change: Choices and Consequences ; Diffusion Processes O  Economic Development, Innovation, Technological Change, and Growth > O4  Economic Growth and Aggregate Productivity > O41  One, Two, and Multisector Growth Models 
Item ID:  109920 
Depositing User:  Defu Li 
Date Deposited:  27 Sep 2021 00:14 
Last Modified:  27 Sep 2021 00:14 
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URI:  https://mpra.ub.unimuenchen.de/id/eprint/109920 