Hicks-neutral technical change

Hicks-neutral technical change is change in the production function of a business or industry which satisfies certain economic neutrality conditions. The concept of Hicks neutrality was first put forth in 1932 by John Hicks in his book The Theory of Wages.[1] A change is considered to be Hicks neutral if the change does not affect the balance of labor and capital in the products' production function. More formally, given the Solow model production function

${\displaystyle Y=A*F(K,L)\,}$,

a Hicks-neutral change is one which only changes ${\displaystyle A}$.[2]

Production Function Y = A * k^α * (h^1-α)

See also

• List of production functions

References

1. Wood, John Cunningham; Woods, Ronald N. (1989). Sir John R. Hicks: Critical Assessments. Routledge. p. 231. ISBN 0-415-01272-4.
2. Mike Moffatt. "Hicks-Neutral/ Hicksian Neutrality". About, Inc.

Further reading

• Burmeister, Edwin; Dobell, A. Rodney (1970). Mathematical Theories of Economic Growth. New York: Macmillan. pp. 67–77.
• Hicks, John Richard (1966) [1932]. The Theory of Wages. St. Martins Press. ISBN 0-333-02764-7.
• Dupuy, Arnaud (2006). "Hicks Neutral Technical Change Revisited: CES Production Function and Information of General Order". Topics in Macroeconomics. 6 (2): 1339. doi:10.2202/1534-5998.1339.
• Blackorby, Charles; Knox Lovell, C. A.; Thursby, Marie C. (December 1976). "Extended Hicks Neutral Technical Change". The Economic Journal. Blackwell Publishing. 86 (344): 845–852. doi:10.2307/2231457. JSTOR 2231457.