Abstract

Abstract This article analyzes the demand-induced technical direction in developing countries under the hypothesis of nonhomothetic preferences. The developing countries face two directed technical changes, one is skill-biased and the other is unskill-biased. Changes in the structure of the social labor force or the social consumption or the rate of exogenous technical progress affect the profit gap between the two technologies. The basic conclusions are that, when the consumption structure is similar between different social classes, the firm prefers the skill-biased technology; when the rate of technical change increases, the firm prefers the unskill-biased technology satisfying some conditions.

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