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1x2 model Consider a mode where production of a single good is given by a constant returns to scale CES production function: $$Y=A(\alpha L^\rho +(1-\alpha)K^\rho)^{\frac{1}{\rho}}$$ where the elasticity of substitution between the two factors is $$ \sigma = \frac{1}{1-\rho} $$ It can be shown that the marginal product of labour (equal to the real wage ...


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Daron Acemoglu's comprehensive book "Introduction to Modern Economic Growth" is a very good source of models and analysis related to technological change and growth. There is a copy of an earlier manuscript that he distributed online here.


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I'd recommend ADVANCED MACROECONOMICS Fourth Edition by David Romer. Its a textbook for advanced macroeconomics, however it covers the topics in a very precise way. Id recommend reading chapters 1 in order to review the basic Solow model and then chapter 3 to see how the model changes when accounting for human capital and endogenous technological growth. ...


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According to Allen (2001), real wages expanded throughout the 19th century in the UK. You seem to imply that they did not. The graph below shows that the UK (London) had higher wages+cost of living than the rest of Europe (except the Netherlands) for several centuries, whereas the rising productivity in the 19th century (because of industrialisation) enabled ...


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Directed technical change is the relatively recent name for what it was was previously called Induced technical change. Informal discussion about the endogenous direction of technical change was first discussed (but not "microfounded") by Hicks (1932) and Fellner (1961). Yet, it was Kennedy (1964) who first proposed a formal model about endogenous ...


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A problem with using energy service prices is that they might reflect competition conditions (e.g. monopoly/oligopoly, or the big six in the UK) rather than the true cost of energy to firms. A problem with using energy prices is that they might reflect demand and supply issues. For example, no one would say that the drop in oil prices from 140 to 50 was ...


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I won't replicate the model -interested readers should read the link the OP provides. Acemoglu's argument as to when a high relative supply of skilled labor will lead to skill-biased technological change is laid out in page 13 (below eq. $(18)$), it includes the all-important condition eq. $(19)$ and ends in the middle of page 14. Here the author explains ...


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The price $χ_L(j)$ is 1! You only need to integrate a constant. That's why you have that equation. (See p. 789, second paragraph, when he normalizes it to 1)


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My understanding is that the literature has so far used three kinds of empirical analysis of the directed technical change. Illustration based on the relationship between the relative supply of skills and the college premium as in Acemoglu (2002). Quantitative Analysis to shed light on the theory as in Acemoglu, Gancia, and Zilibotti (2015). They match key ...


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