218. CHAPTER 6. INPUTS AND PRODUCTION FUNCTIONS had a good
productivity record, but their growth rate of labor productivity declined
considerably ...
Microeconomia David A. Besanko, Ronald R. Braeutigam Copyright © 2009 – The McGraw-Hill Companies srl
218
Microeconomia 2/ed David A. Besanko, Ronald R. Braeutigam © 2012 McGraw-Hill
CHAPTER 6
INPUTS AND PRODUCTION FUNCTIONS
Q = 100 isoquant after technological progress
Q = 100 isoquant before
FIGURE 6.22 Capital-Saving Technological Progress (MRTSL,K Increases) Under capital-saving technological progress, an isoquant corresponding to any particular level of output shifts inward, but the MRTSL,K (the negative of the slope of a line tangent to the isoquant) along any ray from the origin, such as 0A, goes up.
A P P L I C A T I O N
0
L, units of labor per year
6.8
Technological Progress in the United Kingdom Banu Suer has estimated the magnitude and nature of technological progress in a number of manufacturing industries in the United Kingdom.18 Among the industries included in this study were general chemicals, pharmaceuticals, paint, soap, detergents, synthetic rubber, synthetic plastics and resins, dyes and pigments, and fertilizers. In the United Kingdom, these industries have traditionally been characterized by high profit margins, above-average rates of spending on research and development as compared to U.K. manufacturing firms generally, and higher-than-average rates of patent activity. These industries have generally
18
A
K, units of capital per year
technological progress
had a good productivity record, but their growth rate of labor productivity declined considerably after the oil crisis of 1973. Since 1981, however, labor productivity in these industries has improved. This coincides with a period in which firms in these industries aggressively reduced the sizes of their work forces through layoffs. Suer found evidence of significant technological progress in the manufacturing industries he studied. This technological progress was not neutral. Instead, it resulted in an increase in the marginal product of capital relative to the marginal product of labor (i.e., it was labor-saving technological progress). The steep reduction in labor employment in the industries that Suer studied is a sign that this type of technological progress was occurring.
Banu Suer, “Total Factor Productivity Growth and Characteristics of the Production Technology in the UK Chemicals and Allied Industries,” Applied Economics, 27 (1995): 277–285.
