Tasks, Technology, and Factor Prices in the Neoclassical Production Sector
CESifo, Munich, 2020
CESifo Working Paper No. 8353
This paper introduces tasks into the neoclassical production sector. Competitive firms choose the profit-maximizing amounts of factor-specific tasks that determine their factor demands and output supplies. We show that the effect of factor-augmenting technical change on relative and absolute factor prices can be decomposed into a productivity effect and a task-demand effect of opposite sign. These effects appear since the novel task-based approach distinguishes between the demands for tasks and the demands for factors. This perspective provides a new intuition for the emergence of relative and absolute factor biases and the role of the elasticity of substitution.
Fiscal Policy, Macroeconomics and Growth
Empirical and Theoretical Methods