Technical change and surplus labor in the global economy

Abstract Based on the studies of Okishio and Roemer, this study discusses the relationship between surplus value and technological change that reduces costs and labor value by industry. Previous studies were limited in that they constructed a one-country model using a single wage rate and did not consider imported intermediate goods. Therefore, we extend the framework of the previous studies to a case in which imported intermediate goods exist and wage rates differ across countries, using a two-country, two-sector model and a multicountry-multisector model in this study. The analysis reveals that when surplus labor is negative in a country that imports intermediate goods, technological change occurs that reduces costs but uses more direct and indirect labor in the country’s industries. The type of technological change was found to be capital-using and labor-saving.