A recent development in microeconomic theory suggests that the size of the elasticity of substitution between factors is relevant to economic growth. This study undertakes an empirical investigation of this proposition, comparing two economies--the United States and South Korea. The authors' test results support the de la Grandville hypothesis that the elasticity of substitution is a potent explanatory variable of economic growth. This inquiry also provides a clue to the puzzle that the U.S. elasticity of substitution between labor and capital is well below unity whereas that of South Korea is close to unity; nonetheless, the U.S. Factor shares have tended to remain fairly stable whereas the distributive shares of South Korea seem to have changed in favor of capital. Their findings indicate that a high elasticity of substitution is a bad signal for the distribution of income under the paradigm of modern technology. Copyright 1991 by MIT Press.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).
Related research
Keywords:
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)