GTAP Resources: Resource Display
| GTAP Resource #901 |
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"An Estimation of Industry-Level Capital-Labor Substitution Elasticities: Support for Cobb-Douglas" by Balistreri, Edward J., Christine Mcdaniel and Eina V. Wong Abstract A key parameter that determines the distributional impacts of a policy shift in general equilibrium models is the elasticity of substitution between capital and labor. Despite the importance of this parameter in applied modeling, its identification continues to pose a challenge. Given the structure of most growth models, we posit that the true relationship between capital and labor is likely to be close to Cobb–Douglas. Using a rich new data set from the Bureau of Economic Analysis (BEA), we estimate substitution elasticities for 28 industries that cover the entire economy, and provide an indication of the long- and short-run ranges of those estimates. We fail to reject the Cobb–Douglas specification in 20 of the 28 industries. These findings lend support to the Cobb–Douglas specification as a transparent starting point in simulation analysis. |
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- Labor market issues - Calibration and parameter estimation - North America |
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If you have trouble accessing any of the attachments below due to disability, please contact the authors listed above.
Public Access No documents have been attached. Restricted Access No documents have been attached. Special Instructions This paper is now published. Please visit the journal's home page: http://www.elsevier.com/wps/find/journaldescription.cws_home/620163/description#description |
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Last Modified: 9/15/2023 2:05:45 PM
