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A theory of factor allocation and plant size

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  • Thomas J. Holmes
  • Matthew F. Mitchell

Abstract

In this paper we develop a theory of how factors interact at the plant level. The theory has implications for (1) the micro foundations for capital-skill complementarity, (2) the relationship between factor allocation and plant size, and (3) the effects of trade and growth on the skill premium. The theory is consistent with certain facts about factor allocation and factor price changes in the 19th and 20th centuries.

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  • Thomas J. Holmes & Matthew F. Mitchell, 2003. "A theory of factor allocation and plant size," Staff Report 325, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmsr:325
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    Cited by:

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    2. Gavilan, Angel, 2012. "Wage inequality, segregation by skill and the price of capital in an assignment model," European Economic Review, Elsevier, vol. 56(1), pages 116-137.
    3. Damir Stijepic, 2017. "Globalization, Worker Mobility and Wage Inequality," Review of International Economics, Wiley Blackwell, vol. 25(1), pages 108-131, February.
    4. Graetz, Georg & Feng, Andy, 2014. "Rise of the Machines: The Effects of Labor-Saving Innovations on Jobs and Wages," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100401, Verein für Socialpolitik / German Economic Association.
    5. Stijepic, Damir, 2013. "Successive Technical Change and the Demand for Skill," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79870, Verein für Socialpolitik / German Economic Association.
    6. Kurokawa, Yoshinori, 2010. "Fixed cost, number of firms, and skill premium: An alternative source for rising wage inequality," Economics Letters, Elsevier, vol. 108(2), pages 141-144, August.
    7. repec:pri:cepsud:113krusell is not listed on IDEAS
    8. Yoshinori Kurokawa, 2014. "A Simple Model of Competition Policies, Trade, and the Skill Premium," Tsukuba Economics Working Papers 2014-002, Faculty of Humanities and Social Sciences, University of Tsukuba, revised Apr 2020.
    9. Jose Asturias & Jack Rossbach, 2023. "Grouped Variation In Factor Shares: An Application To Misallocation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(1), pages 325-360, February.
    10. Shintaku, Koji, 2015. "Export Decision, the Division of Labor, and Skill Intensity," MPRA Paper 64654, University Library of Munich, Germany, revised 25 May 2015.
    11. Thomas Holmes, 2004. "EconomicDynamics Interviews Thomas Holmes on Dynamic Economic Geography," EconomicDynamics Newsletter, Review of Economic Dynamics, vol. 6(1), November.
    12. Yang, Zhenbing & Shi, Qingquan & Shao, Shuai & Lu, Minwei & Yang, Lili, 2023. "Stricter energy regulations and water consumption: Firm-level evidence from China," Energy Economics, Elsevier, vol. 120(C).
    13. Damir Stijepic, 2016. "Small Employers, Large Employers and the Skill Premium," Economics Bulletin, AccessEcon, vol. 36(1), pages 381-387.
    14. Rusanovskiy, Viktor (Русановский, Виктор) & Markov, Vladimir (Марков, Владимир) & Brovkova, Anna (Бровкова, Анна), 2018. "Modeling the Effects of Spatial Localization in Urban Agglomerations of Russia [Моделирование Эффекта Пространственной Локализации В Городских Агломерациях России]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 6, December.
    15. Richard Walker, 2005. "Superstars and Renaissance Men: Specialization, Market Size and the Income Distribution," CEP Discussion Papers dp0707, Centre for Economic Performance, LSE.
    16. Jose Asturias & Jack Rossbach, 2022. "Grouped Variation in Factor Shares: An Application to Misallocation," Working Papers 22-33, Center for Economic Studies, U.S. Census Bureau.
    17. Walker, Richard, 2005. "Superstars and renaissance men: specialization, market size and the income distribution," LSE Research Online Documents on Economics 19880, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    Labor supply; Human capital;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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