When technological change occurs, it increases the productivity of factors of production such as labor and capital. This increase could be proportionate across all the factors, or the productivity of one factor might increase by an especially large multiple. In the technical language of economics, technical change could be 'factor neutral' or it could be biased toward one factor.
The PIs use firm-level panel data to directly assess whether technological change is biased towards labor or is factor neutral. This is important because other economists working in industrial economics, productivity, and economic growth have made different assumptions about the effects of technological change. This study provides empirical evidence for these assumptions.
The research team also analyzes their data to determine how firm R&D activities affect the speed and direction of technological change in specific firms. The result is a more precise measure of the relationship between R&D activities and productivity growth.
The bias of technological change influences how goods and services are produced and shapes the evolution of individual workplaces, firms, and entire industries. This project is a step towards understanding the sources of technological progress and the resulting societal impact.