Capital-labor substitution and economic efficiency

doi:10.2307/1927286

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Capital-labor substitution and economic efficiency

Journal Article•DOI•

Capital-labor substitution and economic efficiency

Kenneth J. Arrow, Hollis B. Chenery, Bagicha S. Minhas, Robert M. Solow

01 Aug 1961-The Review of Economics and Statistics-Vol. 43, Iss: 3, pp 225-250

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.

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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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Posted Content•

Equilibrium Unemployment With Outsourcing Under Labour Market Imperfections

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Erkki Koskela¹, Rune Stenbacka²•Institutions (2)

University of Helsinki¹, Hanken School of Economics²

01 Jan 2007-Social Science Research Network

TL;DR: In this article, the authors study both the various consequences and the incentives of outsourcing and argue that the wage elasticity of labour demand is increasing as a function of the share of outsourcing, which is consistent with existing empirical research.

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Abstract: We study both the various consequences and the incentives of outsourcing. We argue that the wage elasticity of labour demand is increasing as a function of the share of outsourcing, which is importantly a result consistent with existing empirical research. Furthermore, we show that a production mode with a higher proportion of outsourcing activity reduces the negotiated wage in the high-wage country with an imperfectly competitive labour market so that outsourcing reduces equilibrium unemployment. Finally, we characterize the optimal production mode and show that stronger labour market imperfections lead to a production mode with a higher share of outsourcing.

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56 citations

Cites background from "Capital-labor substitution and econ..."

...…suppliers through outsourcing, L is the amount of labour employed in-house, and , σ and a ρ are parameters satisfying 0 a 1, and 10 ρ , respectively.1 In (1) a is the distribution parameter (see e.g. Arrow et al (1961)) between the production factors, while σ captures the elasticity…...
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Posted Content•

Some Recent Developments in the Theory of Production

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Robert M. Solow

01 Jan 1967-Research Papers in Economics

55 citations

Cites background from "Capital-labor substitution and econ..."

...One of the advantages of formulation (2) is that it gets away from these unnecessarily tight restrictions to "neutrality" of one kind or another, without going all the way back to (1)....
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...Incorporation of this hypothesis into a production function like (1) or (2) has led to so-called vintage models of production....
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...If (2) is Cobb-Douglas, however, then is constant and we have a technical progress function which is linear, or at least linear at each instant of time; and conversely....
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...from (1) or (2), but only on the assumption that the production function is Cobb-Douglas....
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...It has been often shown that Hicks-neutrality is equivalent to (2) and a(T)/b(T) = constant, while Harrod-neutrality is equivalent to (2) and a(T) = constant....
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Journal Article•DOI•

The calibration of CES production functions

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Jonathan R.W. Temple¹•Institutions (1)

University of Bristol¹

01 Jun 2012-Journal of Macroeconomics

TL;DR: In this paper, the authors distinguish between different uses of normalized CES functions, an approach that has become popular in the literature, and propose a simple way to calibrate the parameters of the CES production function when the necessary data are available.

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55 citations

Cites background or methods from "Capital-labor substitution and econ..."

...Most researchers have worked with the standard (ACMS) form, due to Arrow et al. (1961): Y = A (bKρ + (1− b)Lρ) 1 ρ where Y , K and L are output, capital and labor respectively, and where the elasticity of substitution σ = 1/(1 − ρ)....
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...Hence the capital-output ratio can be calculated independently of the production function parameters, and used in equations (2) and (3) together with the researcher’s best guess of the capital share that will obtain asymptotically....
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...Arrow et al. (1961) pointed out that the elasticity of substitution may vary with the level of development, but there is no reason to expect productivity to respond in a straightforward way to such a change, or to expect that a rising elasticity of substitution can be the “engine of growth” implied…...
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Journal Article•DOI•

Tariffs and Income Distribution: Some Empirical Evidence for the United States

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David F. Burgess

01 Feb 1976-Journal of Political Economy

TL;DR: In this paper, the duality between transformation functions and joint cost functions and the generalized linear-generalized Leontief form are used to provide a framework suitable for assessing the income distributional effects of tariffs.

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Abstract: The duality between transformation functions and joint cost functions and 10 the generalized linear-generalized Leontief form are used to provide a framework suitable for assessing the income distributional effects of tariffs. Imports are viewed as intermediate inputs which are combined with capital and labor by the aggregate private domestic producing sector to produce two composite outputs for final demand. The manner by which higher tariffs affect factor rewards depends critically upon whether the technology is separable or nonjoint. Both of these popularly used special cases are shown to be of questionable empirical validity for the postwar U.S. economy. Nevertheless, both models predict that higher tariffs raise real wages.

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55 citations

Journal Article•DOI•

The change in productivity of Chinese state enterprises, 1983–1987

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Roger H. Gordon¹, Wei Li²•Institutions (2)

University of Michigan¹, Duke University²

01 Apr 1995-Journal of Productivity Analysis

TL;DR: In this article, the change in productivity of Chinese state enterprises during 1983-1987 using a panel data set of 403 firms was estimated. But the authors used a new approach to productivity measurement, which can differ arbitrarily across firms, important given the heterogeneity of the sample.

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Abstract: This study estimates the change in productivity of Chinese state enterprises during 1983-1987 using a panel data set of 403 firms. A new approach to productivity measurement is used. Under this approach, the production functions can differ arbitrarily across firms, important given the heterogeneity of the sample. The resulting coefficients estimate the marginal products of each factor as well as overall productivity growth. The results suggest Chinese productivity increased by 4.6 % per year, with about half of this growth due to the rapidly improving education of the labor force.

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55 citations

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References

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Journal Article•DOI•

Technical change and the aggregate production function

[...]

Robert M. Solow

01 Aug 1957-The Review of Economics and Statistics

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.

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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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10,850 citations

Journal Article•DOI•

ECONOMIC GROWTH and CAPITAL ACCUMULATION

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T. W. Swan¹•Institutions (1)

Australian National University¹

01 Nov 1956-Economic Record

3,961 citations

Book•

Resource and output trends in the United States since 1870

[...]

Moses Abramovitz¹•Institutions (1)

Stanford University¹

01 Jan 1956

TL;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

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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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1,031 citations

Book•

Mathematical Analysis for Economists

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R. G. D. Allen

01 Jan 1938

926 citations

Journal Article•DOI•

International trade and the equalisation of factor prices

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Paul A. Samuelson¹•Institutions (1)