Estimating the bias in technical change: A nonparametric approach

- A nonparametric methodology to determine the direction of technical change is proposed.
- The model applies input-specific distance functions to track shifts of the production frontier.
- Technical change of 81 countries during 1970-2014 is analyzed.
- We find that technical change has become increasingly capital-using in industrialized countries.
- Directions in technical change have converged among countries since the productive decade.

In this note we propose a nonparametric methodology to estimate the bias in technical change. We apply the model to estimate the direction of technical progress for a sample of 81 countries covering the period 1970-2014. Our results confirm previous findings that during the 1980s technical change in industrialized countries has become increasingly capital-using. Moreover, we find that patterns in the bias of technical change have converged among different country groups after the productive decade 1995-2004.