Description: Virtual Department Seminar: Dietrich Vollrath
Title: The Elasticity of Aggregate Output with Respect to Capital and Labor
Abstract: I estimate the elasticity of GDP with respect to capital and labor. The estimates allow for industry-specific cost structures, input/output relationships across industries, and market imperfections in the form of markups. As capital costs are not measured in the data, I use different assumptions about those costs to provide upper and lower bounds for the elasticities. In the U.S. from 1948-2018 the capital elasticity bounds increased from 0.15-0.35 to 0.2-0.4, and the labor elasticity bounds fell from 0.65-0.85 to 0.60-0.80, although alternative estimates suggest that the elasticities remained stable at around 0.25 and 0.75 throughout this time period. For 1995-2015 the estimated elasticities are similar across OECD countries.
Contact person: Matthew Clancy