Capital-labor substitution and economic efficiency
TL;DR: In this article, the authors proposed a method to improve the quality of the service provided by the service provider by using the information of the user's interaction with the provider and the provider.
Abstract: Обсуждаются следующие темы: чистая теория производства, функциональное распределение дохода, технический прогресс, источники международных конкурентных преимуществ. Анализируются эластичность замещения между трудом и капиталом в обрабатывающей промышленности; производственные функции различного типа.
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01 Jan 2006
TL;DR: In this paper, it is proved that there is an inverse relation between the elasticity of substitution and average firm size, which can explain why richer countries are characterised by a higher elasticity in sub-stitution.
Abstract: This paper extends the Lucas (1978, The Bell Journal of Economics 9(2), 508-523) analysis of firm size by taking into account a normalised aggregate CES production function. In a general equilibrium framework it is proved that there is an inverse relation between the elasticity of substitution and average firm size. If interpreted together with the fact that richer countries are characterised by a higher elasticity of sub- stitution, this result can explain why the recent literature finds a positive association between the importance of SMEs in an economy and its stage of development, but seems to fail in finding causality between the two. Both have a common origin: a high value of the elasticity of substitution. This paper also provides a first empirical test of the theory proposed using cross- country data from both developed and developing countries.
4 citations
01 Jan 2020
TL;DR: In this article, the authors examined the economy-wide impact of forest plantation development in Laos using a recursive dynamic computable general equilibrium model and focused on the Government of Laos' forest policies to promote the development of forest plantations by the year 2020.
Abstract: Over the past decade, the world has observed a major growth in the development of forest plantations. Despite the considerable number of studies that have been undertaken to examine the impact of forest plantation development, there has been relatively little investigation of the economic impact of plantations. Lao People’s Democratic Republic (hereafter Lao PDR or Laos) has implemented policies to expand plantations based on their contribution to economic development. This paper examines the economy-wide impact of forest plantation development in Laos using a recursive dynamic computable general equilibrium model. Analysis focused on the Government of Laos’ forest policies to promote the development of forest plantation by the year 2020. Simulation results show that this forestry policy is likely to have a positive impact on the Lao economy by increasing the production of forestry and forestry related industries and by stimulating exports and household income. Impacts are more significant for the forestry and forest-related sectors. Despite prompting a relatively higher growth in the production of various other industries, some undesirable impacts are also likely on sectors that do not have strong interactions with the forestry sector. The results also indicate that the government tax revenue is likely to experience some growth.
4 citations
Cites background from "Capital-labor substitution and econ..."
...Value added for each individual sector except for the public sector is represented by a constant elasticity of substitution*4 (CES) production function of composite labour and composite capital (Arrow et al. 1961)....
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TL;DR: In this article, the authors investigated the relationship between the marginal rate of technical substitution and the capital-labor ratio and non-neutral technical progress in the U.S. manufacturing sector.
Abstract: This study investigates several key parameters of the production process for the manufacturing sector of the United States. Attention is focused on the behavior as well as the magnitude of the elasticity of substitution, neutral and nonneutral technical progress (in a Hicksian sense), and the returns to scale. Several papers have been concerned with one or a combination of several of these parameters at the two-digit level of aggregation [7; 14; 16; 25]. However, this paper attempts a more comprehensive approach to production function estimation. By hypothesizing five relations in which the marginal rate of technical substitution is functionally dependent on the capital-labor ratio and nonneutral technical progress (i.e., the cost minimizing relation), a set of production functions is derived that includes the Cobb-Douglas and CES as well as four VES production functions. Estimating all five relations yields not only results on the elasticity of substitution and nonneutral technical progress, but it also enables us to determine the descriptive ability of each of the competing specifications. By incorporating the property of homotheticity, a set of transformations is introduced that allows for returns to scale to be constant or vary with the level of output. Homotheticity has been used in this context [3; 25]. However, estimation of an explicit homothetic transformation that allows us to determine the behavior of the returns to scale is an advancement. Estimation is based on time series data, * The author is an assistant professor of economics at Tulane University. I acknowledge the advice and criticism received from John R. Moroney, David B. Humphrey and an unknown referee. In addition, I thank Mark Schupack for making the data available. 1949-65, for the U. S. manufacturing sector aggregated according to the two-digit classification. Because the time series ends in a strong expansionary period, the problems associated with slack terminal years (and the resultant disequilibria) are avoided. In addition, the homothetic transformations are estimated twice; once with data adjusted for capacity utilization rates and again for unadjusted data.l A potentially significant source of measurement error is measurement of capital in existence (as is usual) when capital in use is required. By using both series, an estimate of the bias in estimating the homothetic transformation due to the capital data misspecification is obtainable. The plan of the paper is as follows. The theoretical relations are presented in Section I. Section II contains the econometric specifications as well as a discussion of the estimation procedure. Section III comprises results and analysis, and some concluding remarks appear in Section IV.
4 citations
Proceedings Article•
01 Jan 2011TL;DR: An analytical model is developed to investigate how a manufacturer selects an optimal mode from competing technologies, including manual mode, Web-based mode and system-to-system mode, and it is found that labor endowment and technology endowment can influence the adoption intervals of these three modes.
Abstract: Web-based system-to-human integration and direct system-to-system integration are alternative information technologies for supply chain management. Although the system-to-system mode is known to be more effective than the Web-based mode for data sharing, the web-based mode is dominant in the supply chain of Chinese firms. Is it a suboptimal or the most appropriate choice? We develop an analytical model to investigate how a manufacturer selects an optimal mode from competing technologies, including manual mode, Web-based mode and system-to-system mode. The contribution of this study is three-fold. First, the expected degree of information sharing influences the manufacturer’s selection. Manual mode is the optimal selection when the expected degree of information sharing is low, whereas system-to-system mode is the optimal choice when the expected degree is high. When the expected degree of information sharing is intermediate, Web-based mode is the optimal choice. Second, based on factor endowment theory, we find that labor endowment and technology endowment can influence the adoption intervals of these three modes. And third, when labor endowment is on the decline and technology endowment is on the rise in the early stage, the Web-based mode is the optimal choice than manual mode or system-tosystem mode. Theoretical and practical implications of these findings are discussed.
4 citations
Cites background from "Capital-labor substitution and econ..."
...Thirty Second International Conference on Information Systems, Shanghai 2011 1 Keywords: Inter-organizational systems, information sharing modes, Web-based mode, system-to-system mode, factor endowment, analytical model 2Thirty Second International Conference on Information Systems, Shanghai 2011...
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...In economic theories, labor and technology are two of the most important production elements, and labor endowment and technology endowment (technology is a primary investment of capital) determine the optimal input proportion for a firm or a country (Arrow et al. 1961; Solow 1956)....
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TL;DR: In this article, the elasticity of substitution of capital and labor in the Soviet economy was investigated and it was shown that a numerical value less than one, perhaps on the order of 0.5, may be more consistent with the statistical evidence.
Abstract: In studies of factor productivity in the Soviet economy, as in many other economic investigations, it has been necessary to make some assumption about the degree to which capital and labor are substitutable for each other. In many, if not most, the investigators have implicitly, and often explicitly, assumed either unitary elasticity of factor substitution, i.e., the renowned Cobb-Douglas function, or infinite elasticity of substitution, the arithmetic function [2-5] [7] [10] [12] [13]. Recent analyses of the American and other economies [1] [6] [8] [9] suggest, however, that a numerical value less than one, perhaps on the order of 0.5, may be more nearly consistent with the statistical evidence. Since the elasticity of substitution may be regarded as an index of diminishing returns, and since inputs of capital and labor have been growing at highly disparate, perhaps unprecedentedly disparate, rates in the USSR, it is of particular interest to ask if the traditional assumptions are indeed suitable. Would a closer approximation to the "truth" be given by the estimates for other countries? In the current state of our knowledge on the Soviet Union can we shed any light on the appropriate value for the elasticity of substitution? If it could very well have been less than unity, as in fact our calculations suggest, what are the implications for quantitative estimates of the sources of Soviet growth? Recently published data on capital and labor inputs and on "synthetic" factor shares in income [2] [10] have made it possible to suggest some tentative answers to these questions, which is the purpose of this paper. We shall proceed as follows. In section II we analyze data on growth of labor and capital and on "synthetic" factor shares to obtain a range of implied values for the elasticity of substitution. In section III we use these values to obtain further implications, those pertaining to the part of growth in output explained by combined input of capital and labor and the part left to be explained by other factors. II Factor Inputs, Synthetic Factor Shares, and the Elasticity of Substitution
4 citations
Cites background from "Capital-labor substitution and econ..."
...omies [1] [6] [8] [9] suggest, however, that a numerical value less than one, perhaps on the order of 0....
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References
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TL;DR: In this article, the authors proposed a method to improve the performance of the system by using the information of the user's interaction with the system and the system itself, including the interaction between the two parties.
Abstract: В статье производится анализ агрегированной производственной функции, вводится аппарат, позволяющий различать движение вдоль такой функции от ее сдвигов. На основании сделанных в статье предположений делаются выводы о характере технического прогресса и технологических изменений. Существенное внимание уделяется вариантам применения концепции агрегированной производственной функции.
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01 Jan 1956TL;DR: In this paper, a very brief treatment of three questions relating to the history of our economic growth since the Civil War is given, namely: (1) How large has been the net increase of aggregate output per capita, and to what extent has this increase been obtained as a result of greater labor or capital input on the one hand and of a rise in productivity on the other? (2) Is there evidence of retardation, or conceivably acceleration, in the growth of per capita output? (3) Have there been fluctuations in the rate of growth of output, apart
Abstract: Introduction This paper is a very brief treatment of three questions relating to the history of our economic growth since the Civil War: (1) How large has been the net increase of aggregate output per capita, and to what extent has this increase been obtained as a result of greater labor or capital input on the one hand and of a rise in productivity on the other? (2) Is there evidence of retardation, or conceivably acceleration, in the growth of per capita output? (3) Have there been fluctuations in the rate of growth of output, apart from the shortterm fluctuations of business cycles, and, if so, what is the significance of these swings? The answers to these three questions, to the extent that they can be given, represent, of course, only a tiny fraction of the historical experience relevant to the problems of growth. Even so, anyone acquainted with their complexity will realize that no one of them, much less all three, can be treated satisfactorily in a short space. I shall have to pronounce upon them somewhat arbitrarily. My ability to deal with them at all is a reflection of one of the more important, though one of the less obvious, of the many aspects of our growing wealth, namely, the accumulation of historical statistics in this country during the last generation. For the most part, the figures which I present or which underlie my qualitative statements are taken directly from tables of estimates of national product, labor force, productivity, and the like compiled by others.
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903 citations