Full Citation

Title: The Micro Elasticity of Substitution and Non-Neutral Technology

Citation Type: Miscellaneous

Publication Year: 2014

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Abstract: I provide evidence on the micro elasticity of substitution between capital and labor using cross-sectional variation in local wages for identification and a comprehensive dataset of US manufacturing plants. I estimate an elasticity of substitution of 0.52 for 1987; estimates across industries mostly range between 0.4 and 0.7. I then use these elasticity estimates to separately identify labor augmenting and capital augmenting productivity. I find that labor augmenting productivity to be the primary dimension of productivity, as it is more persistent and more highly correlated with size and exports than capital augmenting productivity.

Url: http://www.devesh-raval.com/MicroElasticity.pdf

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Authors: Raval, Devesh

Publisher: Federal Trade Commission

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Methodology and Data Collection, Other

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