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Independently devised by John Hicks and Joan Robinson, the elasticity of substitution (σ) plays an important role in mainstream theories of inequality. This paper examines the role of σ in Robinson's writings, charting the differing ways in which she used it to examine questions of distribution. Robinson initially applied the concept to examine distribution in a Keynesian framework, proceeding to downplay its importance later on in spite of having played a central role in its formulation. Her criticisms of the nature of neoclassical production functions led her to dismiss mainstream theories of distribution as tautological, while seeing σ as an expression of the potential for rising profit shares under full employment. The use of a single parameter such as the substitution elasticity in mainstream frameworks neglected the important role played by investment and institutions, drawing focus away from an understanding of the ‘rules of the game’ that determined distributive shares in capitalist economies. Given the primacy of σ in discussions today — in textbooks and in the works of economists such as Thomas Piketty — her writings offer an important critique of established frameworks, while also advancing alternatives that stress the role of institutions and class conflict in modern economies. [ABSTRACT FROM AUTHOR]

Summary: China's labor share has declined since late 1990s. Using the methodology developed by Oberfield and Raval, this paper estimates China's aggregate capital‐labor elasticity of substitution, leveraging the estimated micro‐level elasticities. The findings indicate that China's aggregate capital‐labor elasticity falls within the range of 0.9 to 1. Utilizing this estimated aggregate elasticity for labor share decomposition, we find that the bias of technical change emerges as the predominant factor driving the decline in labor share. [ABSTRACT FROM AUTHOR]

This study investigates the relationship between information technology (IT) and human labor through the lens of education level, task routineness, and artificial intelligence (AI). It makes use of a comprehensive data set covering 60 U.S. industries from 1998 to 2013. The results show that a college degree may not be sufficient, especially in routine-intensive industries, where a graduate degree may be increasingly necessary to meet the demands of computerized work environments. They also suggest that continuous education and IT skill development are essential for workers to thrive in a technology-driven economy. Governments should continue to support higher education to meet the demands driven by IT implementation, particularly as advanced technologies like AI emerge. Long-term training programs should be established to equip less-educated workers with the necessary skills to navigate technological changes. Additionally, policy makers should be cautious about the potential impact of advanced IT, such as AI, on employment rates and consider the consequences of increasing minimum wage levels, as it may incentivize firms to invest more in automation. Overall, this study emphasizes the need for a comprehensive understanding of the IT-labor relationship, guiding decision making for individuals, firms, educators, and policy makers in adapting to the challenges and opportunities presented by advancing technology. Although information technology (IT) is increasingly replacing human labor, the IT-labor relationship is more nuanced than it appears. We examine the IT-labor relationship in terms of various levels of education, intensities of routine tasks, and exposure to artificial intelligence (AI). Making use of an industry-level data set covering 60 U.S. industries from 1998 to 2013, we adopt an innovative measure of elasticity of substitution that enables us to capture the asymmetric price impact between IT and labor. Our findings indicate that IT generally complements high-education labor (master's degree or above), while substituting for low-education labor (high school degree or below). For middle-education labor (bachelor's or associate's degree), however, the IT-labor relationship is more nuanced: They are complements in non-routine-intensive industries, but substitutes in routine-intensive industries. We also find that IT is a complement (substitute) with high-education labor in industries with lower (higher) AI exposure and remains a net substitute for low- and middle-education labor, regardless of their AI exposure. Our findings suggest that even college-educated labor has now become susceptible to IT displacement, whereas labor with graduate education largely remains a strong complement to IT (with an exception in high-AI-exposure industries). Theoretical and policy implications are discussed. History: Eric Zheng, Senior Editor. Funding: Tyson Browning is grateful for support from a Neeley School of Business Research Excellence Award. Supplemental Material: The online appendix is available at https://doi.org/10.1287/isre.2021.0391. [ABSTRACT FROM AUTHOR]

This paper studies the effect of factor substitution on long‐run growth and the convergence speed in the one‐sector endogenous‐growth model. We consider a general production function that encompasses the most commonly used specifications as particular cases. For two economies with the same initial conditions and parameter values, including the baseline elasticity of substitution (EOS), the one with the higher asymptotic EOS has the higher long‐run growth and convergence speed. If the asymptotic EOS is a nondecreasing function of its baseline value, an increase in the baseline EOS entails a higher long‐run growth and convergence speed. [ABSTRACT FROM AUTHOR]

This paper presents a new way to estimate the constant elasticity of substitution $ (\sigma ). $ (σ). We show that the link between $ \sigma $ σ and Divisia index numbers gives rise to a revealing way to obtain preliminary estimates of $ \sigma $ σ. This approach, which is related to stochastic index numbers, is illustrated with time-series and cross-country data. Using consumption data for 12 commodities over time from 23 European countries, we obtain 400 + estimates of $ \sigma $ σ, which mostly lie between 0 and 1. The cross-country estimates are broadly similar. Extensions of the approach to deal with endogenous prices and non-homothetic demand are also considered. [ABSTRACT FROM AUTHOR]

This paper examines the causes of falling labour share in OECD and non-OECD countries since the 1980s by using Karabarbounis and Neiman's (2014) labour share model. While both groups of countries experience an elasticity of substitution between capital and labour, the factors driving down labour share are different. In OECD countries, export and volatility are key drivers, but in non-OECD countries, the significant factors are financial openness and the capital's relative price. Overall, technological advancement – as reflected by declining capital's relative price – coupled with globalization and low economic risk are key factors in explaining a long-term decline of labour share worldwide. [ABSTRACT FROM AUTHOR]

Based on a multisector general equilibrium framework, we show that the sectoral elasticity of substitution plays the key role in the evolution of asymmetric tails of macroeconomic fluctuations and the establishment of robustness against productivity shocks. A non-unitary elasticity of substitution renders a nonlinear Domar aggregation, where normal sectoral productivity shocks translate into non-normal aggregated shocks with variable expected output growth. We empirically estimate 100 sectoral elasticities of substitution, using the time-series linked input-output tables for Japan and find that the production economy is elastic overall, relative to a Cobb-Douglas economy with unitary elasticity. In addition to the previous assessment of an inelastic production economy for the USA, the contrasting tail asymmetry of the distribution of aggregated shocks between the USA and Japan is explained. Moreover, the robustness of an economy is assessed by expected output growth, the level of which is led by the sectoral elasticities of substitution under zero-mean productivity shocks. [ABSTRACT FROM AUTHOR]

The economics literature emphasizes the importance of the elasticity of substitution between capital and labour in several economic contexts. However, analyses of the effect of the elasticity of substitution on the direction of technological change are often overlooked. Most assessments of the direction of technological change rely on a Constant Elasticity of Substitution (CES) production framework. This strand of empirical work considers the elasticity of substitution between capital and labour as a deep and fixed parameter. In this article, we show that the change in the elasticity of substitution that has occurred in recent decades might be an alternative source of change of factor income shares in addition to changes in factor-augmenting technological change. We construct a theoretical environment in which the elasticity of substitution is determined endogenously by the capital share and capital intensity. Rolling window estimates and non-linear estimation methods show that the elasticity of substitution in nine OECD economies observed between 1950 and 2017 was not constant and that, in fact, in the latter half of the 1970s, the elasticity of substitution increased, in the presence of labour-augmenting technical change. [ABSTRACT FROM AUTHOR]

This paper addresses the substitution elasticity of capital on the labour force in the context of the development of intellectualization. Given the substitution of capital for labour, China's benchmark listed logistics companies are compared with an American company to discuss the evolution of capital – labour substitution. A large-scale intellectualization process began in 2017, and based on a variable elasticity of substitution, this paper creates an econometric model of substitution elasticity between capital and labour and its evolution between 2017 and 2021. The American logistics company UPS maintains a relatively high level of substitution elasticity, and Chinese logistics companies are quickly catching up. The substitution elasticity of capital on labour in Chinese enterprises trends upward year after year. In 2021, the capital – labour substitution elasticity of logistics enterprises in both countries showed considerable growth. The calculation model of substitution elasticity presented in this paper can be extended to different regions and industries to measure intelligent development levels and the relationship between capital and the labour force. [ABSTRACT FROM AUTHOR]

The main objectives of this study are to estimate the biased technical progress in China considering heterogeneity in human capital and labor force, examine how this heterogeneity quantitatively impacts the elasticity of substitution and biased technical progress compared to homogeneous labor assumptions, and compare the growth rates of human capital-augmenting and labor-augmenting technical progress. The estimation procedure involves a constrained Seemingly Unrelated Regression (SUR) using provincial-level panel data from 1985 to 2021. By comparing results with and without accounting for labor force heterogeneity and human capital, the analysis quantifies their impact on the estimated elasticity of substitution between factors and the magnitude and direction of technical bias. Results found that the elasticity of capital-labor (human capital) substitution is between 0.7 and 0.8, and the elements are generally complementary. Although it does not affect the overall trend of elasticity of substitution and biased technical progress, the heterogeneity of human capital and labor force has a quantitative impact on them. It means that the elasticity of substitution increased, and the biased technological progress decreased. Moreover, the growth rate of human capital-augmenting technical progress was significantly lower than that of labor-augmenting technological progress. This study estimates the biased technical progress in China, where the human capital and labor force are heterogeneous. The findings suggest that policymakers should prioritize human capital investments and technological upgrades in industries to rebalance China's technical progress and boost productivity growth.

This paper provides a structural panel GMM (P-GMM) estimator of the elasticity of substitution between capital and labour that does not depend on external instruments, and which can be applied in the presence of biased technical change. We identify the conditions under which P-GMM is a consistent estimator and compare it to a fixed effects estimator. Using a Monte Carlo study, we find that the P-GMM estimator is nearly unbiased provided the number of time periods (T) is not too small. We show analytically how the small- T bias is related to metrics of weak identification. In an application on manufacturing firms in Norway, we estimate the elasticity of substitution to be 1.9 using the P-GMM and 1.0 using the fixed effects estimator. Neglecting simultaneity may thus lead to the conclusion that capital and labour are complements or can be described by Cobb–Douglas technology, when, in fact, they are substitutes. [ABSTRACT FROM AUTHOR]

Recent research has begun to imply intermediate goods–skill complementarity; however, this possible complementarity has been hypothesized but not statistically tested, despite the increasing importance of intermediate goods in production. This study provides statistical evidence regarding whether intermediate goods are more complementary with skilled labor than with unskilled labor. Using panel data from 40 countries over the period 1995–2009, we estimate a two-level constant elasticity of substitution (CES) production function. Our major findings are fivefold. First, at the aggregated one-sector level, the elasticity of substitution between intermediate goods and unskilled labor is 1.22, which is significantly greater than that between intermediate goods and skilled labor of 1.05, indicating intermediate goods–skill complementarity. Second, at the disaggregated level, such complementarity is primarily observed in heavy manufacturing industries and the service sector, whereas complementarity is observed between intermediate goods and unskilled labor in the primary sector and light manufacturing industries. Third, the normalization of the data and the cumulant estimators exhibit stronger results. Fourth, our baseline results are confirmed applying several robustness checks, such as switching skilled and unskilled labor or considering capital–skill complementarity. Finally, intermediate goods–skill complementarity tends to be higher for industries that use more imported intermediate goods. [ABSTRACT FROM AUTHOR]

Using the fixed observation point data of the national sweet potato industry technology system in 2021, this paper constructs a transcend logarithmic production function model. Taking organic fertilizer application amount, chemical fertilizer application amount, labor force, other capital input and sweet potato planting area as input factors, sweet potato yield per unit is the output factor. This paper empirically studies the effects of organic and chemical fertilizers on the productivity of sweet potato in the process of sweet potato planting and growth, and explores the substitution relationship and degree between the two. The results showed that both organic fertilizer and chemical fertilizer had a significant positive effect on sweet potato yield. The output elasticity of chemical fertilizer was 0. 817, which was the most important input factor in the growth process of sweet potato. The output elasticity of organic fertilizer was 0. 503. The effect of fertilizer is weaker than that of chemical fertilizer, and both of them have an inverted U-shaped effect on sweet potato yield, but organic fertilizer has a positive effect on the improvement of fertilizer output elasticity. The substitution elasticity of organic fertilizer and chemical fertilizer is less than 1, the substitution relationship between the two is weak, and there is a certain complementarity. Therefore, in order to ensure the yield and quality of sweet potato, the combined application of organic fertilizer and chemical fertilizer should be promoted There are differences in yield elasticity between different potato regions. It is very important to understand the basic fertility and biochemical environment of the soil when applying fertilizers according to local conditions. Therefore, this paper proposes to increase the application of organic fertilizers to promote the output efficiency of chemical fertilizers, and to choose the appropriate amount of organic fertilizers and chemical fertilizers according to local conditions, so as to improve the utilization rate and economic benefits of fertilizers. [ABSTRACT FROM AUTHOR]

In this article we assess the validity of the elasticity of substitution indicator to evaluate natural resource substitution. After clarifying the importance of the static equilibrium hypothesis for the development of such an indicator, we demonstrate that its application to growth conditions imposes the observation of decreasing inflows of natural resource as a necessary consequence. We derive this result without making any assumptions not recognized by advocates of the neoclassical approach. In addition to refuting the neoclassical substitution model, this result helps clarify the relationship observed since the Industrial Revolution between the physical and economic substitution of natural resources.

We estimate the elasticity of substitution between high-skill and low-skill workers using panel data from 32 countries during 1970–2015. Most existing estimates, which are based only on US microdata, find a value close to 1.6. We bring international data together with a theory-informed macro-approach to provide new evidence on this important macroeconomic parameter. Using the macro-approach, we find that the elasticity of substitution between tertiary-educated workers and those with lower education levels falls between 1.7 and 2.6, which is higher than previous estimates but within a plausible range. In some specifications, estimated elasticity is above the value required for strong skill-bias of technology, suggesting strong skill-bias is possible. [ABSTRACT FROM AUTHOR]

Copyright of Desenvolvimento e Meio Ambiente is the property of Universidade Federal do Parana and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Economic History Research / Investigaciones de Historia Económica is the property of Asociacion Espanola de Historia Economica and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The current study aims at investigating the relationship between private and government consumption within CFA franc zone. In fact, since the decade 2000, most of these countries have launched ambitious spending programs in order to become emergent in the 2035 horizon. For this aim, we applied the cointegration approach of Ogaki (1992) and Ogaki and Park (1997) using panel data and country level analyses for the period 1985–2019. Results from the two methodologies indicate that private consumption and public expenditure are better described as Edgeworth-Pareto substitutes. Conventionally, this means that an increase in government spending decreases the marginal utility of private consumption. Consequently, fiscal stimuli in CFA franc countries are harmful since they crowd out the private consumption. However, in case these countries have to face a fiscal consolidation, the substitutability pattern between private and public consumption is likely to moderate the contractionary impact of cuts in government consumption. [ABSTRACT FROM AUTHOR]

In this paper it’s demonstrated that over the past decade Russia has sought to diversify its economic ties in favour of East Asian countries as part of the strategy on ‘turning to the East’. Such ties accounted for almost one third of Russia’s foreign trade turnover by 2020. According to the estimates presented in the article, the negative impact of geopolitical factors on Russian foreign trade has affected most countries that border Russia. At the same time, proximity and the presence of a land border have generally had a positive effect on Russian foreign trade, which indicates the opportunity to redistribute the foreign trade flows towards Asia. An assessment of the intensity of Russia’s foreign trade with East Asian countries demonstrates the redundancy of barriers in bilateral interactions. These estimates indicate a greater intensity of trade between the Russian economy and China, as well as the presence of Russia’s significant potential for expanding trade in the case of ‘deep’ integration with East Asian countries by levelling excess costs: with China – by 84%; with Taiwan – by 86%; with the Republic of Korea – by 102%; with ASEAN countries – by 113%; with Japan – by 122%. Due to the higher share of the trade with China in Russia’s foreign trade, rapprochement with the Chinese economy will contribute to generating large volumes of trade turnover between Russia and the outside world. It has been shown in the paper that as Russia approaches the economies of East Asia, reciprocity should be taken into account when reducing bilateral barriers as it may directly affect the choice of Russian strategy for purposes related to increasing mutual trade

Major changes have taken place in the agricultural factor input structure in China, which will inevitably affect fertilizer input in agriculture. However, there is no consistent conclusion about the impact of capital and labor input on chemical fertilizer input. This paper employed directed acyclic graphs (DAGs) to clarify the influence of capital-labor input structure on the use of chemical fertilizer. Using inter-provincial panel data, the dynamic panel system GMM method was adopted to examine the mechanism of factor substitution elasticity in determining the impact of agricultural capital-labor input on chemical fertilizer input. The results showed that agricultural labor and capital input are positively correlated with chemical fertilizer input. In the process of capital and labor input affecting fertilizer input, the elasticity of factor substitution plays a negative moderating role. From 1996 to 2018, the trend of capital replacing labor was evident, and the increase ratio of capital input was greater than the decrease ratio of labor input. Therefore, an increase in capital input and its substitution for labor is the main driver of the increase in fertilizer input. At the same time, the elasticity of fertilizer-capital substitution declined during the period 1996–2018, thereby reinforcing the increase in fertilizer input caused by the increase in capital input. In order to reduce agricultural pollution caused by the increase in chemical fertilizer input, it is crucial to reverse the declining trend in the elasticity of fertilizer capital substitution. [ABSTRACT FROM AUTHOR]

We provide a nonlinear model of intersectoral balance with constant elasticity of substitution (CES) production functions of industries and CES utility function of final consumer for the study of intersectoral linkages in the Kazakhstan economy. The model is formalized in terms of the primal problem of resource allocation and the corresponding Fenchel dual problem which solution gives costs of inputs of industries in a supply network. We identify the model with the actual data of the Input-Output tables of Kazakhstan and estimate the elasticity of substitution of production factors for the aggregated industry complexes. With the help of developed framework, we evaluate the inter-industry financial flows in the aggregated supply network for the period 2013–2020 and compare the results with the actual data of Kazakhstan. The developed framework can be used to support decision-making processes in sustainable supply chain management in a situation of the government economic policy change and external shocks. Using the developed framework, we evaluate the risks for Kazakhstan's supply chains in scenario of sharp weakening of the national currency. [ABSTRACT FROM AUTHOR]

In recent years, the overtime culture has generally emerged in Chinese enterprises (CEs), the length of workers’ working hours has been lengthened, and their intensity has increased. Still, the labor income share has declined, which deserves in-depth analysis. This paper introduces a relative labor intensity indicator to estimate the trend of the labor income share based on the general factor-enhanced CES production function in China. The econometric model is then introduced to analyze in-depth the influencing factors leading to this trend using relevant data from 2001 to 2020. If the elasticity of substitution is less than 1 and capital and labor are complementary, then the labor income share tends to decrease. This is because the relative labor intensity tends to increase while the growth rate of the capital-labor ratio tends to decrease. The empirical results also show that the decrease in labor income share and labor compensation is related to monopoly and the amount of capital input. If the amount of capital input is higher and the degree of monopoly is higher, then the labor income is lower, and the share of labor income is lower. Monopolies and capital intercept most of the value created because of the increased labor intensity, and laborers receive only a small profit.

Copyright of Turkish Studies - Economics, Finance, Politics is the property of Electronic Turkish Studies and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper provides a nationwide casual estimation of air pollution on labor share for the manufacturing industry in China from 1998 to 2015. Using changes in the annual intensity of thermal inversion as an instrument, we find that a 1μg/m3 increase in PM2.5 increases labor share by 4.01%-6.50% (about 0.02-0.04 in absolute value). Results show that although both labor income and capital income decrease, capital income decreases more which results in a labor share increase. The results also reveal that labor income change is primarily driven by labor productivity loss and effective labor decline, and the drastic drop of capital income results from the complementary relationship between capital and labor which is indicated by the elasticity of substitution. By describing labor share as wage–productivity gap, we find that wage does not decline enough to match productivity loss when air pollution happens. Although stricter environmental regulations may lead to a reduced labor share and further income inequality, the study suggests that the overall economic benefit will be enhanced. [ABSTRACT FROM AUTHOR]

This study analyzes the effects of Venezuelan migration, including Colombian returnees, on wages in Colombia based on information from the Great Integrated Sample Survey for the period 2013-2019. Both migrants and natives were classified by educational level and labor experience. Since migrants can displace native workers, we estimate the magnitude of the displacement effect by groups based on fixed effects regression models. The results suggest a low but statistically significant effect, though not significant from the technical point of view. However, the estimated elasticities of substitution show perfect substitution in some groups. Regarding the effects on wages, the results indicate a mainly negative impact ranging between -6,01% and 0,03%, depending on the group of workers and the period, being higher among those with perfect elasticity of substitution. [ABSTRACT FROM AUTHOR]

Abstract The constant elasticity of substitution (CES for short) is a basic property widely used in some areas of economics that involves a system of second-order nonlinear partial differential equations. One of the most remarkable results in mathematical economics states that under homogeneity condition i.e. the production function is a homogeneous function of a certain degree, there are no other production models with the CES property apart from the famous Cobb–Douglas and Arrow–Chenery–Minhas–Solow production functions. In this paper we generalize this classification result to a much wider framework of production functions under quasi-homogeneity conditions, showing in particular the existence of three new classes of production models with the CES property.

Technological progress does not uniformly benefit all industries or factors' productivity levels. The energy productivity and labour employment situation in the Chinese petrochemical industry have not witnessed substantial improvements in the last decade. The literature has overlooked the importance of recognizing the directional nature of technological progress, which could enable a more strategic approach to economic development, resource allocation, and policy formulation. This study, guided by the core principles of endogenous economic growth theory, aims to uncover the influencing mechanisms and effects of technological progress bias on energy and employment by extending a theoretical model to account for energy, capital, and labour factors. The results reveal: (1) From 2000 to 2021, the relationship between labour, capital, and energy factors in the Chinese petrochemical industry has been predominantly complementary, with technological progress favouring labour-augmenting that is increasing labour productivity; (2) The gross complementarity of production factors leads to labour-augmenting technological progress, ultimately biased towards energy and capital factors; (3) Energy-capital-biased technological progress encourages producers to invest more energy and capital to substitute for labour factors, leading to a limited improvement in energy productivity and a consistent decline in labour employment since 2011. This study further corroborates that without government intervention, it would lead to improper factor allocation in the industry, resulting in market failure. Finally, corresponding policy recommendations are proposed. [Display omitted] • The mechanism and effect of technological progress direction are uncovered. • Relationship of labour, capital and energy factors was predominantly complementary. • Technological progress direction biased towards energy and capital factors. • Biased technological progress increased capital and energy substitution for labour. • The study confirms the occurrence of market failure in the petrochemical industry. [ABSTRACT FROM AUTHOR]

The degree of substitutability between clean and dirty energy plays a central role in leading economic analyses of optimal environmental policy. Despite the importance, assuming a constant and exogenous elasticity of substitution has been a dominant theoretical approach. We challenge this assumption by developing a dynamic general equilibrium model with an endogenous elasticity of substitution that interacts with the relative share of clean inputs in the economy. We find strong dynamic feedback effects arising from endogenous substitution capacity that amplifies the impact of directed technical change and accelerates the transition to a green economy. [ABSTRACT FROM AUTHOR]

In this paper we investigate the effectiveness and the welfare implications of various fiscal policies in strategic bilateral trade. To this end, we reconsider the class of bilateral oligopoly models with taxation implemented in Gabszewicz and Grazzini (J Public Econ Theory 1999, 1:475–497, and in: Debreu G, Neuefeind W, Trockel W (eds) Economic essays, a Festschrift for Werner Hildenbrand, Springer, Berlin, 2001 109–126). Assuming the preferences of traders are represented by CES utility functions with non unitary shares on consumption, we determine the Cournot–Nash equilibria, and we study the effects of two fiscal policies with transfers. We show that both fiscal policies with transfers implement a first-best allocation only when commodities are perfect complements or perfect substitutes. [ABSTRACT FROM AUTHOR]

Introduction: The study examines the importance of intertemporal substitution in import demand considering the role of habit formation. A two-goods version of the permanent income model is used in which time-non-separability in consumers's preferences is assumed. The model is estimated using annual data for Pakistan at disaggregated level covering the period from 1977 to 2017. Objectives: The objective of the study is to estimate elasticities of substitution along with parameters of habit formation for consumption goods at a disaggregated level. Method: The study employs co-integration for the estimation of parameters of elasticities of substitution and generalized method of moments (GMM) for the estimation of the parameters of habit formation from Euler equations. Findings: The estimates of intertempral elasticity of substitution suggest that the nature of commodity group (necessity/luxury) plays an important role when consumers are making intertemporal choices. Moreover, the study finds that intratemporal elasticity of substitution is larger than intertempral elasticity of substitution in almost all cases in Pakistan, suggesting that imported and domestic goods are best described as substitutes in Edgeworth-Pareto sense. In addition, the inclusion of habit formation delivers results with plausible signs and the habit formation process seems significant for certain commodity groups including tea, beverages, tobacco products and drugs. Conclusion: The study concludes that there is a possibility of crowding out effect on domestic consumption and the depreciation of local currency may improve Pakistan's balance of trade. [ABSTRACT FROM AUTHOR]

This note analyzes the effect that the specification of technology has on the long-run growth rate and the asymptotic speed of convergence in the one-sector endogenous-growth model. We compare three otherwise identical economies – with the same baseline and parameter values – but with different production technologies: CES, VES or Sobelow, respectively. The long-run growth rate and the asymptotic convergence speed under CES production are lower than the corresponding ones under Sobelow production which, in turn, are lower than those under VES production. This is because a higher elasticity of substitution entails a higher easiness to substitute capital for labor which, in the end, results in a higher long-run growth rate. [ABSTRACT FROM AUTHOR]

In this paper, we use data on mixed-gender dual-earner couples in Southern and Western Europe to investigate how the division of unpaid household labor within mixed-gender couples varies depending on the ratio of the partners' market wages. From analysis of the EU Statistics on Income and Living Conditions, we first show that married or cohabiting women do twice as much household work as single women with the same income. Furthermore, women's time spent in home production does not vary in relation to the couple's relative wages in Southern Europe. We find a positive elasticity of substitution between male and female labor in home production with respect to their relative within-couple wages in Western Europe. Our identification is based on predicting each country's wage distributions within gender-specific cells defined by age group and education using distributions in all the other countries. We present a positive evidence for presence of a "second-shift" that women face especially in Southern Europe, which may stem from regional gender norms. [ABSTRACT FROM AUTHOR]

We study the effect of factor substitutability in the neoclassical growth model with variable elasticity of substitution. We consider two otherwise identical economies differing uniquely in their initial factor substitutability with Variable-Elasticity-of-Substitution (VES), Sobelow or Sigmoidal technologies. If the initial capital per capita is below its steady-state value, the economy with the higher initial elasticity of substitution will feature a higher steady-state income and capital per capita irrespective of whether the production technology is VES, Sobelow or Sigmoidal. Numerical results are provided to compare the effect of a higher elasticity of substitution in the Constant-Elasticity-of-Substitution (CES) model versus the models with variable-elasticity-of-substitution technology. [ABSTRACT FROM AUTHOR]

Background: The rate of substitution for private and public health expenditures is one of the factors that can explain the different effects of public and private health expenditures on health and life expectancy. Therefore, the purpose of this study was to estimate the return to scale, share, and elasticity of the substitution for public and private health expenditures in Iran. Methods: In this descriptive-analytical study, linear and nonlinear least squares methods were applied to study the share and elasticity in substitution of private and public health expenditures at national level in Iran during 2000-17. The study data included the annual time series data extracted from the World Bank website. The Stata 14 software was used to estimate the economic model. Results: In the nonlinear and linear models of Elasticity of Substitution Constant (CES) health function in Iran, elasticity of substitution for public and private health expenditures were 0.30 and 0.17, respectively. The return to scale in nonlinear and linear models was 0.07 and 0.15, respectively. The share of public health expenditures on life expectancy in the nonlinear and linear model was 54 and 53 % and the share of private health expenditures in these models was 46 and 47 %, respectively. Conclusion: Public and private health expenditures are poor substitutes of each other in Iran and increase of these health expenditures leads to an increase in life expectancy. A decreasing return exists to scale in public and private health expenditures on life expectancy in Iran. The share of public health expenditures is higher than the share of private health expenditures on life expectancy in Iran.

Abstract Vietnam’s economy is one of the most energy-intensive economies in the world, facilitated by long-standing government policies indirectly subsidizing energy prices through various state-owned enterprises in the energy sector. A consequence of this is that firms are using too much energy in production. This raises a crucial issue as to whether Vietnam can continue its development trajectory in the new era with rising energy prices and increased awareness of the use of fossil fuels and environmental pollution. In this context, understanding energy use patterns and firms’ behaviors regarding cheap energy prices is critical to forming appropriate energy policies and management practices. Using large-scale firm-level data, we have found explicit evidence of firms’ substitution of energy for capital inputs. This effect is present in both the short term and long term and in many energy-intensive industries. These results indicate that there is substantial benefit in appropriate pricing of primary energy and electricity, while also providing credit incentives for capital investment in more energy-efficient equipment. Reducing the rate of growth of energy demand, averaging approximately 10% annually, will have significant macroeconomic impacts. A quicker transition to less energy-intensive economic growth will also help to protect both the environment and public health.

The main objectives of this study are to estimate the biased technical progress in China considering heterogeneity in human capital and labor force, examine how this heterogeneity quantitatively impacts the elasticity of substitution and biased technical progress compared to homogeneous labor assumptions, and compare the growth rates of human capital-augmenting and labor-augmenting technical progress. The estimation procedure involves a constrained Seemingly Unrelated Regression (SUR) using provincial-level panel data from 1985 to 2021. By comparing results with and without accounting for labor force heterogeneity and human capital, the analysis quantifies their impact on the estimated elasticity of substitution between factors and the magnitude and direction of technical bias. Results found that the elasticity of capital-labor (human capital) substitution is between 0.7 and 0.8, and the elements are generally complementary. Although it does not affect the overall trend of elasticity of substitution and biased technical progress, the heterogeneity of human capital and labor force has a quantitative impact on them. It means that the elasticity of substitution increased, and the biased technological progress decreased. Moreover, the growth rate of human capital-augmenting technical progress was significantly lower than that of labor-augmenting technological progress. This study estimates the biased technical progress in China, where the human capital and labor force are heterogeneous. The findings suggest that policymakers should prioritize human capital investments and technological upgrades in industries to rebalance China's technical progress and boost productivity growth., Competing Interests: The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper., (© 2024 The Authors. Published by Elsevier Ltd.)