Induced innovation and the economics of herbicide use

We present direct econometric tests of the induced innovation hypothesis. We test whether the price of herbicides relative to labor, machinery, and land, as well as research stocks, affects the direction of technological change and long-run substitution of herbicides for labor, machinery, and land, in U.S. agriculture. In the long run, a decrease in the price of herbicides relative to labor induces a strong labor-saving and herbicide-using bias in technological change. Public research induces labor-saving, machinery-saving, land-saving, and herbicide-using biases. Exogenous changes in scientific knowledge and/or spillovers from other sectors are labor and machinery saving and herbicide using.