Induced innovation

Induced innovation is a macroeconomic hypothesis

Hypothesis

A hypothesis is a proposed explanation for a phenomenon. The term derives from the Greek, ὑποτιθέναι – hypotithenai meaning "to put under" or "to suppose". For a hypothesis to be put forward as a scientific hypothesis, the scientific method requires that one can test it...

 first proposed in 1932

1932 in literature

The year 1932 in literature involved some significant events and new books.-Events:*E. V. Knox replaces Sir Owen Seaman as editor of Punch magazine.*Samuel Beckett's first novel, Dream of Fair to Middling Women, is rejected by several publishers....

 by J.R. Hicks

John Hicks

Sir John Richard Hicks was a British economist and one of the most important and influential economists of the twentieth century. The most familiar of his many contributions in the field of economics were his statement of consumer demand theory in microeconomics, and the IS/LM model , which...

 in his work The Theory of Wages

The Theory of Wages

The Theory of Wages is a book by the British economist John R. Hicks published in 1932 . It has been described as a classic microeconomic statement of wage determination in competitive markets...

. He proposed that "a change in the relative prices of the factors of production is itself a spur to invention

Invention

An invention is a novel composition, device, or process. An invention may be derived from a pre-existing model or idea, or it could be independently conceived, in which case it may be a radical breakthrough. In addition, there is cultural invention, which is an innovative set of useful social...

, and to invention of a particular kind—directed to economizing the use of a factor which has become relatively expensive."

Considerable literature has been produced on this hypothesis, which is often presented in terms of the effects of wage increases as an encouragement to labor-saving innovation. The hypothesis has also been applied to viewing increases in energy

Energy

In physics, energy is an indirectly observed quantity. It is often understood as the ability a physical system has to do work on other physical systems...

costs as a motivation for a more rapid improvement in energy efficiency of goods than would normally occur.