ABSTRACT OF PAPER
Title: Technical Change and Wages in a Closed Economy
Author: ALIERTA Mariano
The aim of the paper is to analyse the consequences of technical change in the evolution of wages. The influence of technical change on employment, on business cycles and on economic growth has been analysed frequently. It is possible to mention the debate of the effects of machinery on employment in which David Ricardo was a participant. On the effects of technological changes on business cycles there is the presence of Joseph Schumpeter and the effects of technical change on growth is a permanent subject of analysis that can be found already in Adam Smith (with his pin analysis) and has taken a considerable increase after the publication by Solow of his paper on growth. But the relation between technical change and wages has not been so much analysed and deserves to be studied. Technical changes in the production method tend to produce an increase in the scale or dimension of the level of output of the firm. A. Smith already points this out in his example on the production of pins. This increase applies particularly to the production of consumers goods. In the economic system there has to be also other variations because the increase of production has to be absorbed in the market. There has to be a greater demand for a growing mass of goods and to generate these demands there must be sufficient incomes. As these incomes are generated in the production process, being wages the most important part of incomes, the conclusions of the whole relations indicate that when capital (or reorganization) is used to produce greater quantities of consumer goods in a system, it is necessary that wages increase so that the increased production have a demand. Accumulation of capital and technological changes in the firms that produce consumer goods, require an increase in (real) wages in order for the economic system to be able to reach and maintain internal situations of equilibrium. These conclusions accommodate to the (historical) facts. (Real) wages have grown in the countries that have recorded innovations in production. And (real) wages continue to grow in modern markets economies. In an open economy the external world can influence the path of wages. But, as been indicated, the experience shows the growth of real wages of countries.
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