We present a theoretical argument to identify the conditions under which a firm prefers to invest in factor saving innovations rather than neutral innovations. We prove that incentives to invest in factor saving innovations positively depend on i) total factor productivity and ii) the scarcity...

We modify the standard trade model introducing the possibility of biased technological changes. This model help to explain the falling labor shares as well as the mixed changes in skill premium in developing countries after trade liberalization takes place

We use annual data on capital's share and relative factor prices from 35 US industries from 1960 to 2005 to test the induced innovation hypothesis. We derive, from a productionfunction framework, testable implications for the effect of contemporaneous and lagged factor price ratios on capital's...

We propose a one-good model where technological change is factor saving and costly. We consider a production function with two reproducible factors: physical capital and human capital, and one not reproducible factor. The main predictions of the model are the following: (a) The elasticity of...