Biased Technical Change And Effect On Factor Share Change

Technological progress has been the hot issue of the economics research fordecades, in the study of technological progress many scholars continue to make newprogress. Technology progress not only refers to the production process ofinnovation and improvement of production equipment, and also shown as theaccumulation of knowledge and innovation. In the latest research, technologyprogress is not neutral, but will favor a certain elements, which means that if we raisethe supply of certain elements, as the output grows, at the same time, technologicalprogress will increase the marginal output of this element. However, on currentliterature, the bias of technological progress has not been given sufficient attention,especially in China, people tend too much attention to technological progress itself,but ignored its bias. We can define biased technological progress as following: if thetechnological progress can improve some elements of the relative marginal output,then technological progress have biased, biased in favor of such elements. Furthermore, we have technological progress weak absolute bias and strong absolute bias:The relative abundance of elements can lead technological progress bias on itself, andimprove the relative marginal output of the elements, such technological progress asthe weak absolute bias of technological progress; when the bias is strong enough, therelative abundance of the elements can lead technological progress bias on itself,improving the relative marginal output of the elements, and makes the relative factordemand curve upward sloping shape. On the basis of the existing research work, Wemake a more in-depth research and exploration on bias of China’s technologicalprogress: Built and calculated technical progress bias index, weak bias oftechnological progress index of the provinces and industries of China. Bycalculating the technological progress bias index we found that China’s provinces andindustries during the whole samples period, average of the technical progress biasindex is positive and the technological progress in all regions generally biased in favor of capital; weak bias of technological progress exists and is highly consistentwith the trends of technological progress.In the typical form of production function, capital and labor are two importantinputs. Once well-regarded "Kaldor facts" advocates that the allocation of capital andlabor share remains constant, the Cobb-Douglas production function is a simple testof "Kaldor facts". But maybe the fact is not like this, many scholars have confirmedthat, In western countries the allocation of capital share is rising, "Kaldor facts" havebeen questioned. The evolution of distribution of elements share in China showssimilar characteristics. Why? In addition to macro policies such as industrialrestructuring and other factors, the bias of technological progress has an importantrole in promoting. After measuring biased technological progress of differentindustries and areas, further in-depth study of the evolution of elements share andgiving the explanation of changing of current elements share trend contrary to the"Kaldor facts" from China, is the other key task of this article. In this paper, bybuilding the elements share of changing model, using dynamic panel GMM method,we estimate the factors affecting the elements share. Results showed that theincreased relative capital and labor share significantly increase the next issue of theallocation of capital and technological progress is more biased on capital ; Theinfluence of international trade is significant, by impacting the of technology choice,import and export trade volume increases make technical progress bias towardscapital, and have certain effect on the rising of capital share; growth of foreign directinvestment makes technological progress interested in labor, also improves the shareof labor; capital deepening has significantly positive effect on relative distributionof capital and labor share; growth of per capita showed an upward trend, and makestechnological progress biased in favor of capital.