A Microfoundation for Production Functions: Assignment of Heterogenous Workers to Heterogenous Jobs
AbstractIn very different fields of economics, economic inference and policy evaluation require economists to parametrize a production function that links measures of input factors to measures of output. While doing so, strong assumptions are implicitly made about microeconomic variables governing the shape of the aggregate production function. In this paper, I develop an assignment model that provides a microeconomic foundation for aggregate production functions. The shape of the production function depends crucially on the distribution of workers and jobs and the type of technological changes depends crucially on the evolution of these distributions. Sufficient and necessary conditions are provided for the production function to be of the Constant Ratio of Elasticities of Substitution form, a form nesting the broadly used Constant Elasticity of Substitution form. This model provides a way to evaluate how stringent assumptions about the type of production function or technological change are by comparing the implied distribution of jobs and its evolution over time to observations of the distribution of jobs and its evolution over time.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3312.
Length: 30 pages
Date of creation: Jan 2008
Date of revision:
Publication status: published in: Economica, 2012, 79 (315), 534-556.
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Other versions of this item:
- Arnaud Dupuy, 2012. "A Microfoundation for Production Functions: Assignment of Heterogeneous Workers to Heterogeneous Jobs," Economica, London School of Economics and Political Science, vol. 79(315), pages 534-556, 07.
- D2 - Microeconomics - - Production and Organizations
- D3 - Microeconomics - - Distribution
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
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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.:
- Teulings, Coen N, 1995. "The Wage Distribution in a Model of the Assignment of Skills to Jobs," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 280-315, April.
- Dupuy, Arnaud, 2008.
"The Assignment of Workers to Tasks, Wage Distribution and Technical Change: A Critical Review,"
IZA Discussion Papers
3379, Institute for the Study of Labor (IZA).
- Dupuy, Arnaud, 2008. "The Assignment of Workers to Tasks, Wage Distribution and Technical Change: A Critical Review.," Open Access publications from Maastricht University urn:nbn:nl:ui:27-19046, Maastricht University.
- Borghans, Lex & ter Weel, Bas, 2008.
"Understanding the Technology of Computer Technology Diffusion: Explaining Computer Adoption Patterns and Implications for the Wage Structure,"
IZA Discussion Papers
3792, Institute for the Study of Labor (IZA).
- Borghans Lex & Weel Bas ter, 2008. "Understanding the Technology of Computer Technology Diffusion: Explaining Computer Adoption Patterns and Implications for the Wage Structure," Research Memoranda 009, Maastricht : ROA, Research Centre for Education and the Labour Market.
- Bas ter Weel & L. Borghans, 2009. "Understanding the technoloy of computer technology diffusion: explaining computer adoption patterns and implications for the wage structure," CPB Discussion Paper 117, CPB Netherlands Bureau for Economic Policy Analysis.
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