# Empirical Analysis of Biased Technological Progress

## Abstract

This chapter investigates the empirical adequacy of several propositions and assumptions provided in earlier chapters. The novelty of our empirical analysis is the proposal of a new econometric procedure to estimate the efficiency coefficients of labor and capital (*A* and *B*) *separately*, and this procedure is applied to data for Japan. First, we find that the elasticity of substitution between capital and labor is less than 1. Second, the growth rate of *B* is negative on average over the sample period 1994–2012, which suggests that labor-saving technological progress is introduced from the theoretical perspective developed in earlier chapters. Third, the growth rate of *B* is negative, as the labor share of income is higher than the elasticity of substitution. Fourth, the labor share of income is adjusted toward the value of the elasticity of substitution over the sample period. Fifth, the unemployment rate increases (decreases) as the labor share of income is larger (smaller) than the elasticity of substitution.