Biased Technological Change, Impatience and Welfare

In this paper we use an OLG model where agents are heterogeneous within each generation, differing in their impatience rate. We show that the effects of a capital-using technological change are not symmetric between agents and can cause a reduction in consumption. The asymmetry in impatience rates has consequences on the benefits derived from technological change for further generations. Lower impatience rates lead to higher capital levels, and to higher levels of consumption provided that the economy has enough capital per capita.