Affiliation:
1. Indian Institute of Foreign Trade , New Delhi , Delhi , India
Abstract
Abstract
This study demonstrates why traditional “cost-saving” technical progress fails in an economy where consumption is time-constrained. In such a case, introducing “time-saving” technical progress establishes a new consumption-production equilibrium characterized by higher per-capita consumption and real income, lower prices, and, a higher scale of production for surviving producers. Nonetheless, since there is a limit to how much time can be saved by technological advances, the model also suggests an alternative solution in the form of a rising labor force (say via immigration) to close the production-consumption gap. This solution generates an unambiguous increase in welfare, vis-à-vis cost-reducing or time-saving technical progress.
Subject
General Economics, Econometrics and Finance
Reference34 articles.
1. Basch, M. 2020. End of Global Population Boom “A Major Drag on Economic Growth”. Jacksonville Daily Record. Also available at https://www.jaxdailyrecord.com/article/end-of-global-population-boom-a-major-drag-on-economic-growth (accessed January 28, 2020).
2. Becker, G. S. 1965. “A Theory of the Allocation of Time.” The Economic Journal 75 (299): 493–517. https://doi.org/10.2307/2228949.
3. Binswanger, M. 2004. “Time-saving Innovations and Their Impact on Energy Use: Some Lessons from a Household-Production-Function Approach.” International Journal of Energy Technology and Policy 2 (3): 209–18.
4. Brenčič, V., and D. Young. 2009. “Time-saving Innovations, Time Allocation, and Energy Use: Evidence from Canadian Households.” Ecological Economics 68 (11): 2859–67. https://doi.org/10.1016/j.ecolecon.2009.06.005.
5. Dixit, A. K., and J. E. Stiglitz. 1977. “Monopolistic Competition and Optimum Product Diversity.” The American Economic Review 67 (3): 297–308.