The Study of the Choice of Directed Technical Change under the Nonhomothetic Preferences Hypothesis

摘要

This article analyzes the demand-induced technical direction in developing countries under the hypothesis of nonhomothetic preferences. The developing countries face two directed technical changes, one is skill-biased and the other is unskill-biased. Changes in the structure of the social labor force or the social consumption or the rate of exogenous technical progress affect the profit gap between the two technologies. The basic conclusions are that, when the proportion of skills increases, the firm prefers the skill-biased technology; when the consumption structure is similar between different social classes, the firm prefers the skill-biased technology; when the rate of technical change increases, the firm prefers the unskill-biased technology satisfying some conditions. So if a country's income disparity is caused by the technical direction, we can narrow the income disparity by affecting the technical direction through changing the structure of the labor force, the consumption structure and the rate of exogenous technology progress.