Abstract
This study investigates technical change biases and their effects on distribute shars in Korea. We are particularly concerned with whether technical change biases have been induced by changes in relative factor prices accompanied by rapid economic growth in Korea. Our test results show that technical change in Korea has been biased in the direction in the direction for saving labour and using capital, thus rendering support to the induced innovation hypothesis. These findings are roughly in parallel with empirical studies on the induced innovation hypothesis for the US and Japanese economies. The similar pattern in technical change biases between Korea and the two advanced economies is noteworthy in light of their basic differences in factor endowments. Another salient feature of our empirical analysis is that the price-corrected labour share in Korea has continually shrunk in the process of rapid economic growth, which has been partly precipitated by factor price-disorting policies.
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