Is technological change biased toward energy? A multi-sectoral analysis for the French economy

Since the adoption and implementation of new technologies has an important influence on the structure and performance of the economy in both developed and developing countries, many research papers are devoted to the technology–economy nexus. Motivated by the fact that the impact of technical progress on the demand for different production factors may vary depending on the bias of the technological change, in this paper, by estimating a translog cost-share system and using state-space modeling technique, we investigate to what extent the direction of technical change is biased toward energy and away from other factors. By applying this methodology to the French economy for the period 1978–2006 the obtained results suggest that: first, technical change has a non-neutral impact on factor demands; second, capital-saving technical progress is present in the majority of the sectors studied; third, energy demand has increased in all sectors but electricity and gas. These findings may have important policy implications for environmental and energy issues in France.