Measuring the Bias of Technological Change∗ Ulrich Doraszelski† Jordi Jaumandreu‡ University of Pennsylvania Boston University This draft: March 19, 2015 First draft: December 13, 2008 Abstract Technological change can increase the productivity of the various factors of produc- tion in equal terms or it can be biased towards a specific factor. We directly assess the bias of technological change by measuring, at the level of the individual firm, how much of it is labor augmenting and how much is factor neutral. To do so, we develop a framework for estimating production functions when productivity is multi-dimensional. Using panel data from Spain, we find that technological change is biased, with both its labor-augmenting and its factor-neutral component causing output to grow by about 2% per year. ∗We thank Pol Antr`as, Matthias Doepke, Michaela Draganska, Jos´eCarlos Fari˜nas, Ivan Fernandez-Val, Paul Grieco, Chad Jones, Dale Jorgenson, Larry Katz, Pete Klenow, Jacques Mairesse, Ariel Pakes, Amil Petrin, Zhongjun Qu, Devesh Raval, Juan Sanchis, Matthias Sch¨undeln, and John Van Reenen for helpful discussions and Sterling Horne, Mosha Huang, Thomas O’Malley, and Dan Sacks for research assistance. We gratefully acknowledge financial support from the National Science Foundation under Grants No. 0924380 and 0924282. An Online Appendix with additional results and technical details is available from the authors upon request. †Wharton School, University of Pennsylvania, Steinberg Hall-Dietrich Hall, 3620 Locust Walk, Philadel- phia, PA 19104, USA. E-mail:
[email protected]. ‡Department of Economics, Boston University, 270 Bay State Road, Boston, MA 02215, USA. E-mail:
[email protected].