Embodied technological change learning-by-doing and the productivity slowdown

Abstract

The productivity slowdown faced by the US economy since the first oil shock has been associated with a rise in the decline rate of the relative price of equipment and a reduction in the rate of disembodied technical change. We build up a growth model in which learning-by-doing is the engine of both embodied and disembodied technological progress. A change in the relative efficiency of learning-by-doing from the consumption to the investment sector is shown to imply a technological reassignment consistent with the above mentioned evidence. This result derives from the interaction between the obsolescence costs inherent to embodiment and the learning-by-doing engine.Embodied technical progress, Obsolescence, Learning-by-doing, Productivity slowdown