Economic growth and economic development 711

Introduction to Modern Economic Growth
between skilled and unskilled workers. The estimates are typically between 1.4 and
2. See, for example, Katz and Murphy (1992), Krusell, Ohanian, Rios-Rull and
Violante (1999), and Angrist (1995). A number of estimates are summarized and
discussed in Hamermesh (1993) and Acemoglu (2002b).
Evidence that 19th century technologies were generally labor-complementary
(unskilled-biased) is provided by, among others, James and Skinner (1985) and
Mokyr (1990) , while Goldin and Katz (1998) argued the same for a range of important early 20th century technologies.
Blanchard (1997) discusses the persistence of European unemployment and argues that the phase during the 1990s can only be understood by changes in technology reducing demand for high-cost labor. This is the basis of Exercise 15.27
below. Caballero and Hammour (1999) provide an alternative and complementary
explanation to that suggested here.
Acemoglu and Zilibotti (2001) discuss implications of directed technological
change for cross-country income differences. We have not dwelled on this topic
here, since this will be discussed in greater detail in Chapter 19.5 in the context of
appropriate technologies.
Acemoglu (2003b) suggested that increased international trade can cause endogenous skill-biased technological change. Exercise 15.21 is based on this idea.
Variants of this story have been developed by Xu (2001), Gancia (2003), Thoenig
and Verdier (2003).
The model of long-run purely labor-augmenting technological change was first
proposed in Acemoglu (2003a), and the model presented here is a simplified version
of the model in the paper. Similar ideas were discussed informally in Kennedy
(1964). Jones (2005) presents an alternative model in which long-run technological
change is labor augmenting. The assumption that the elasticity of substitution
between capital and labor is less than 1 receives support from a variety of different
empirical strategies. The evidence is summarized in Acemoglu (2003a).
The Habakkuk hypothesis has been widely debated in the economic history literature. It was first formulated by Habakkuk (1962), though Rothbarth (1946)
had anticipated these ideas almost two decades earlier. David (1975) contains a detailed discussion of the Habakkuk hypothesis and potential theoretical explanations.
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