Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/125753
Authors: 
Vogel, Johanna
Kratena, Kurt
Hranyai, Kathrin
Year of Publication: 
2015
Series/Report no.: 
WWWforEurope Working Paper 98
Abstract: 
This paper is concerned with measuring and influencing the direction of technological change. First, it provides a comprehensive assessment of the factor bias of technological change using panel data from the World Input-Output Database (WIOD) for 25 EU countries from 1995 to 2009. We measure the bias with respect to the inputs capital, energy, non-energy materials and three types of labour (low-, medium- and high-skilled). For this purpose, the factor cost share approach based on the duality of production theory is applied. Estimating the system of cost share equations derived from a translog cost function, we find that technological change was low- and medium-skilled labour-saving, high-skilled labour-using, and energy- and materials-using. Second, the paper addresses the question how technological change could be redirected towards saving more energy and less labour. Patent applications in energy- and labour-saving technology fields are used to model the direction of technological change. We construct stocks of patents in these fields and integrate them into the system of cost share equations as proxies for the level of technology. Upon finding that they were indeed energy and labour saving over our sample period, we regress them on policy variables to identify instruments for shifting the bias away from saving labour towards saving energy. We conclude that one way to achieve this, at least partly, would be an increase in the energy tax rate coupled with a matching reduction in the social security contributions paid by employers for low-skilled workers.
Subjects: 
Factor bias of technological change
translog cost function
induced innovation
environmental innovation
ICT
robotics
count data models for panel data
Europe
WIOD
JEL: 
O33
O31
D24
Q55
Q58
C33
C35
Document Type: 
Working Paper
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