ABSTRACT OF PAPER
Title: Schumpeterian Adaptation and Labour Shortage
Author: Haas David
Models of Schumpeterian adaptation explore how the economy adapts after a new method of production has been introduced. They involve a specific approach to disequilibrium adjustments, which does not rely on adapting micro entities via imitation (or innovation), but on a change in their (relative) importance. The change in market shares is driven by the differential firm growth and implies that economically superior methods of production gradually supersede inferior ones. In these models it normally is assumed that labour is available in abundance and that installed capacities are fully utilized. In contrast, the paper assumes that labour is inflexibly supplied and that the labour force grows at a constant and exogenously given rate. The aim of the paper is to shed light on the role of labour bottlenecks and under-utilized capacities in the process of adaptation. Main phenomena investigated include: (i) transitory technological unemployment; (ii) re-absorption of workers made redundant due to the implementation of the innovation; (iii) growth ‘predation’ as a result of competition for workers in short supply. How these phenomena affect the performance of the system as a whole is studied for different types of innovations.
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