Abstract
This study delves into the impact of labor-saving technological progress on the capital accumulation of technology companies that have a substantial workforce consisting of highly skilled workers over the sample period from 2000/Q2 to 2021/Q3. To begin with, we estimate a three-equation system of the normalized-CES production function to derive labor-saving technical progress and the elasticity of substitution between capital and labor for NASDAQ-100 firms. Secondly, two linear regression models are estimated by using parameters acquired in the initial step to assess the impacts of labor-saving technological progress on capital accumulation. Based on the estimation results, labor-saving technological progress and the elasticity of substitution between capital and labor mitigate the upward trend of capital accumulation despite their stimulating impacts on economic value added in the NASDAQ-100 firms. These two adverse results are consistent with the concept of skill intensity in technology firms, referring to the difficulties of replacing automation with non-routine tasks and highly skilled workers. In this sense, along with the insufficient replacement of technological progress with labor, the detrimental effects of technological progress on capital accumulation widen the gap between labor productivity and labor compensation during profit expansion periods. These negative consequences are mitigated by worker layoffs during profit-downsizing periods, despite its accelerating impact on economic value added.
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