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 2009
TL;DR: In this paper, the idea of downweighting less reliable observations is applied to propose a modification for the instrumental variables estimator and to study a robust version of the correlation coefficient, and the least weighted s regresssion by an asymptotic test of heteroscedasticity of the random errors.
Abstract: The least weighted squares (LWS) regression is a robust method for estimating parameters in linear regression models. It is asymptotically efficient for normalmodels while very robust for contaminated models. This paper broadens the scope of applications of the least weighted squares, mainly to econometrics. The idea of downweighting less reliable observations is applied to propose a modification for the instrumental variables estimator and to study a robust version of the correlation coefficient. Further we supply the least weighted s regresssion by an asymptotic test of heteroscedasticity of the random errors. Finally computational aspects of the LWS estimator are studied. Mathematics Subject Classification 2000: 62G35, 62J20, 62P20 General Terms: Robust statistics, Instrumental variables, Heteroscedasticity, Computational aspects
4 citations
Cites background from "Capital-labor substitution and econ..."
...The first data set comes from Arrow et al. (1961), studied also by Kmenta (1986). The response...
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...The first data set comes from Arrow et al. (1961), studied also by Kmenta (1986)....
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TL;DR: In this article, it was shown that there is a great deal of inequality between the marginal products and prices of separate inputs, but there is an equality between the discrepancy can be considered a "disaggregation bias" that when all firms are combined to form a competitively determined industry production function, the marginal product of the input index is equal to its average cost.
Abstract: T has long been recognized that the provision of nonpecuniary rewards to a factor of production creates a corresponding reduction in the observed market price of the factor. But the effect of the provision of nonpecuniary rewards on marginal products and thus on the relationship between marginal products and observed factor prices, has long remained an open, albeit unpressing, question in economic theory. This neglected question has recently grown in importance as several influential papers concerned with the estimation of production functions (e.g., Solow [ 7 ] and ACMS [2]) have been crucially based on the identification of marginal products with observed factor prices. Section I of this paper contains a generalization of the usual theory of the firm which allows for (1) joint production in a general form and (2) the existence of outputs which are not separately marketed. Differences between private marginal products and competitive factor prices, hereafter called "discrepancies," are seen to be possible when and only when some of the firm's outputs are sold or evaluated in factor markets as nonpecuniary rewards. A factor's observed price is seen to equal its "net" marginal product, its marginal product plus the reduction in payments to other factors made possible by a unit addition of the factor. Since the latter part of the net marginal product is not a derivative of an observed production function, the following empirical proposition becomes obvious: A factor's marginal product cannot be identified with its observed competitive factor price; nor can the magnitude or direction of the actual discrepancy be casually specified. This proposition immediately implies the existence of a fallacy, probably a crippling fallacy, in the modern approach to the estimation of production functions. Section II, which builds on the analysis of discrepancies in section I, contains the key result that any discrepancy can be considered a "disaggregation bias"that when all firms are combined to form a competitively determined industry production function and all inputs are suitably grouped to form a single input index, the marginal product of the input index is equal to its average cost! To establish this, it is shown that for given relative output prices and given conventions on the indirect marketing of outputs, an ordinary industry production function generally exists in neoclassical, competitive equilibrium, that this aggregate production function is linearly homogeneous, and that observed factor payments exhaust the product; yet there are, in general, no equalities between factor prices and marginal products. This surprising result is used to show that the identification of the aggregate marginal product of a factor with its observed factor cost can be justified on neoclassical grounds only when the "factor" is a single index of all of the various factors of production. Thus, while the modern techniques of studying technology based upon identifying marginal products of individual factors with observed factor prices are theoretically groundless in the presence of nonpecuniary rewards, the techniques of testing for scale economies and measuring technical change introduced by CobbDouglas and by Abramovitz [ 1 ] and Kendrick [5] are valid applications of neoclassical theory under suitable treatments of the relevant input indices. Also rationalized is a technique devised by the present author [8] of estimating both the degree of aggregate returns to scale and the annual rate of technical change with a single index of all inputs.1 * This work was supported by the Institute of Government and Public Affairs at the University of California at Los Angeles and by the National Science Foundation under Grant G-16239. The author benefited substantially from a discussion with Karl Brunner and from the comments by a Referee on an earlier draft. 1 The empirical results of [8] strongly confirm a hypothesis suggested by the present paper; viz., that there is a great deal of inequality between the marginal products and prices of separate inputs but there is an equality between
4 citations
Cites background from "Capital-labor substitution and econ..."
...The remarkable ACMS study [2] converts an empirical result that the typical elasticity of labor productivity with respect to the wage is...
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..., Solow [ 7 ] and ACMS [2]) have been crucially based on the identification of marginal products with observed factor prices....
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Dissertation•
01 Sep 1998
TL;DR: In this paper, the authors investigated the differences between the two most commonly used approaches for measuring the relative efficiencies of organizational units in an analysis and showed that it is possible to say more confidently which of the two estimates is closer to the true efficiency for individual units.
Abstract: This thesis gives an overall view of the two most commonly used
approaches for measuring the relative efficiencies of organisational
units The two approaches, data envelopment analysis (DEA) and
stochastic frontiers (SF), are supposedly estimating the same
underlying efficiency values but the natures of the two methods are very
different This can lead to different estimates for some, or all, of the
units in an analysis
By identifying the nature of these differences this work shows that it is
possible to gain some insight into the nature of the underlying data and
to say more confidently which of the two estimates is closer to the true
efficiency for individual units
In order to investigate the differences between the methods across
different facets of the technology two important dimensions are chosen
Firstly differences across scale size are investigated It is shown how it
is possible to define a measure of scale size in both the single output
and multiple input and output cases This measure of scale size can
then be used to split the technology into regions of differing scale size
enabling, for example, tests for the true nature of returns to scale in
DEA The measure of scale size developed in multiple dimensions
necessitates a method for estimating an homothetic, constant returns to
scale function
Differences between the approaches across input mix are also
investigated These differences may highlight the abilities of the
methods to correctly identify the elasticity of substitution between the
inputs
The results of the comparisons between the methods are summarised
This summary gives possible reasons for differences which may be
found between the results of the two approaches, and an indication of
what the nature of the estimates may be to the true efficiency values
An algorithm is then developed for using a comparison of the results
from the two methods to help to identify the better estimates
4 citations
Cites background from "Capital-labor substitution and econ..."
..., the Constant Elasticity of Substitution (CES) (Arrow et al. (1961), Leontief, Generalised Leontief (Diewert (1971)), translog (Christiansen, Jorgensen and Lau (1971)), etc....
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..., the Constant Elasticity of Substitution (CES) (Arrow et al. (1961), Leontief, Generalised Leontief (Diewert (1971)), translog (Christiansen, Jorgensen and Lau (1971)), etc. Gong and Sickles (1992) used a Monte-Carlo analysis to investigate the benefits and drawbacks of some of these forms for efficiency measurement (this paper will be discussed in more detail in the next chapter). See also Guilkey, Lovell and Sickles (1983)....
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..., the Constant Elasticity of Substitution (CES) (Arrow et al. (1961), Leontief, Generalised Leontief (Diewert (1971)), translog (Christiansen, Jorgensen and Lau (1971)), etc. Gong and Sickles (1992) used a Monte-Carlo analysis to investigate the benefits and drawbacks of some of these forms for efficiency measurement (this paper will be discussed in more detail in the next chapter)....
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Posted Content•
TL;DR: In this paper, the authors compute the aggregate values for capital, production and labour and find that the neoclassical postulates do not hold for the whole dataset under consideration, which is an anomaly.
Abstract: Standard postulates concerning the aggregate production function are about marginal productivities - and the associated demand of labor and capital – which are to be negatively related to factor prices, namely the wage rate and the profit rate. The theoretical cases in which these neoclassical properties do not hold are regarded as anomalies. We compute the aggregate values for capital, production and labour and find that the neoclassical postulates do not hold for the whole dataset under consideration.
4 citations
Cites background from "Capital-labor substitution and econ..."
...The neoclassical aggregate production function is a mathematical relation that links the output with the inputs and which holds specific properties (Solow, 1955, 1956, 1957; Arrow et al., 1961; Ferguson, 1969; Shephard, 1970)....
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...Arrow et al. (1961) introduce additional feature, which include homogeneity of degree 1 - i.e. AF ( K, L) = AF ( K, L) = Y - and Constant Elasticity of Substitution....
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Posted Content•
TL;DR: In this article, the authors present a parametric analysis of the Houthakker specification of the fundamental indirect utility function, called the CDES specification (constant differences of Allen elasticities of substitution) by Hanoch (1975).
Abstract: In this paper, we unify and extend the analytical and empirical application of the ”indirect addilog” expenditure system, introduced by Leser (1941), Somermeyer- Wit (1956) and Houthakker (1960). Using the Box-Cox transform, we present a parametric analysis of the Houthakker specification of the fundamental indirect utility function - called the CDES specification (constant differences of Allen elasticities of substitution) by Hanoch (1975). It is shown that the CDES demand system is less restrictive than implied by standard parameter restrictions in the literature, Hanoch (1975), Deaton & Muellbauer (1980), or else neither adequately indicated, Houthakker (1960), Silberberg & Suen (2001). Our parametric examination implies that Marshallian own-price elasticities are no longer restricted to being all larger than one in absolute value; hence CDES can now naturally exhibit both the inelastic and elastic own price elasticities of observable (Marshallian) demands. Furthermore, we argue that in computable general equilibrium models (CGE), the CDES compares favorably with other expenditure systems, e.g. the linear expenditure system (LES), since CDES and LES need the same outside information for calibration of the parameters, but CDES is not confined to constancy of marginal budget shares (linear Engel curves). Moreover, we show that the non-homothetic CDES preferences are a simple and natural extension of the homothetic CES (constant elasticities of substitution) preferences, and, accordingly, CDES can more realistically be used in specifying CGE models with a demand side of non-unitary income elasticities. A succint theoretical briefing of the CDES history with general and concise formulas is offered. We illustrate CDES estimation and the calculation of a comprehensive set of income and price elasticities by applying CDES to Danish budget survey data. With a large number budget items included, coherent numerical values for the income, own, and cross price elasticities, as shown here, seem nowhere calculated and available in the voluminous literature.
4 citations
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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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3,961 citations
Book•
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.
1,031 citations
903 citations